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Will Maxim Integrated (MXIM) Beat Earnings Estimates This Quarter?

Zacks Equity Research

Maxim Integrated Products (MXIM) is set to report fourth quarter fiscal 2013 results on Jul 25. Last quarter, it posted a 7% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Despite posting a year-over-year increase in the top line, primarily boosted by consumer and computing end markets; higher costs and the resultant contraction in margins kept the lid on earnings.

However, management is positive about the automotive end market as it clinched several design wins in the last quarter. Steady growth in distributor design registrations also boosted revenues. Maxim also witnessed stronger demand for its femtocell offerings.

Further, Maxim started shipping for Samsung’s flagship device, S4. It also expanded its product portfolio to sensors, motion control and other areas of smartphones, tablets and hybrid devices, which will increase its dollar content per device.

Earnings Whispers?

The Zacks Consensus Estimate for the fourth quarter stands at 47 cents per share while that for fiscal 2013 stands at $1.80.

Maxim has surpassed estimates in the trailing four quarters, which resulted in an average positive surprise of 8.57%. We believe that Maxim has the potential to beat expectations in the upcoming quarter as well.

The last 30 days saw no estimate revisions for both the fourth quarter and fiscal 2013. As a result, the Zacks Consensus Estimates for both periods have remained unchanged.

The chances of a big surprise are unlikely given the lack of catalysts during the quarter. The stock carries a Zacks Rank #4 (Sell).

We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Our model states that a stock needs to have both a positive Zacks Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 to beat earnings estimates. You could, therefore, consider the following stocks as our model shows that they have the right combination of elements to post an earnings beat this quarter:

InvenSense Inc. (INVN), Earnings ESP of +8.33% and a Zacks Rank #2 (Buy).

Huron Consulting Group Inc.(HURN), Earnings ESP of +1.64% and a Zacks Rank #2 (Buy).

Gartner Inc.(IT), Earnings ESP of +1.96% and a Zacks Rank #2 (Buy).

Read the Full Research Report on MXIM

Read the Full Research Report on HURN

Read the Full Research Report on IT

Read the Full Research Report on INVN

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