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MKS Instruments (MKSI) Q3 Earnings: What's in the Cards?

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MKS Instruments (MKSI) Q3 Earnings: What's in the Cards?

MKS Instruments (MKSI) Q3 earnings to mainly benefit from growing demand in advanced markets. However, temporary softness in semiconductor market remains a concern.

MKS Instruments MKSI is set to report third-quarter 2018 results on Oct 24.

Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, delivering an average positive surprise of 5.35%.

In the last reported quarter, the company’s earnings of $2.33 per share surpassed the Zacks Consensus Estimate of $2.22 per share. The figure was much better than $1.41 per share reported in the year-ago quarter.

Revenues of $573 million surpassed the Zacks Consensus Estimate of $570 million and came in 19% higher than the year-ago figure, driven by strong demand from semiconductor and advanced market segments.

For the third quarter of 2018, MKS Instruments forecasts earnings in the range of $1.60-$1.86 per share. Revenues are anticipated in the range of $470-$510 million.

Let’s look at how things are shaping up for this announcement.

MKS Instruments, Inc. Price and EPS Surprise

MKS Instruments, Inc. Price and EPS Surprise | MKS Instruments, Inc. Quote

Key Factors

MKS Instruments is gaining from strong semiconductor, industrial and other advanced end-markets demand.

The company’s strategy to diversify revenue streams toward high-margin and high-growth advance markets is reflected in its top line growth. Notably, in the last reported quarter, sales from advanced markets were up 19% to $237 million from the year-ago quarter.

The acquisition of Newport is also helping the company strengthen its presence in the advanced markets. The acquisition has helped MKS Instruments expand its market segments and win new orders, which is a positive.

Additionally, the company’s investments in the light and motion division, which is approximately $1 billion annualized run-rate, are expected to contribute to third-quarter 2018 revenues.

These investments helped MKS Instruments expand its offerings in areas like lithography and inspection of the semiconductor markets, which constitute the major chunk of the company’s revenues. Notably, in the last reported quarter, sales to semiconductor customers increased 19% year over year to $336 million.

However, moderate spending by the company’s customers and temporary softness in the semiconductor market may prove to be a drag on third quarter revenues.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.

MKS Instruments has a Zacks Rank #4 and an Earnings ESP of +0.23%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Salesforce.com CRM has a Zacks Rank #1 and Earnings ESP of +0.50%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Apple AAPL has a Zacks Rank #2 and Earnings ESP of +2.45%.

Adobe Systems ADBE has a Zacks Rank #2 and Earnings ESP of +0.20%.

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