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Will Molex (MOLX) Miss Earnings Estimates?

Zacks Equity Research

Molex Inc (MOLX) is set to report first quarter fiscal 2014 results on Oct 23. Last quarter it posted a 2.94% negative surprise. Let’s see how things are shaping up for this announcement.

Growth Factors This Past Quarter

In the fourth quarter of 2013, Molex missed the Zacks Consensus Estimate by 2 cents or 6.8% as a result of weaker-than-expected revenue and a higher tax rate.  Rising costs coupled with stronger growth in low-margin segments made matters worse.

Molex expects revenue of $890-$930 million in the first quarter of 2014. The EPS is expected to be 35 to 39 cents a share, assuming a tax rate of 30%-32%.Molex should do well in the longer-term, as its customers introduce new products targeting the BRIC countries, as well as Vietnam and Thailand, where growth is expected to be stronger than in other parts of the world.

Earnings Whispers?    

Our proven model does not conclusively show that Molex will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:  Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 37 cents. Hence, the difference is 0.00%.

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    

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter: 

  • SanDisk Corporation (SNDK), Earnings ESP of +2.84% and a Zacks Rank #1 (Strong Buy)
  • Microchip Technology Inc (MCHP), Earnings ESP of +0.0% and a Zacks Rank #1 (Strong Buy)
  • Jarden Corp (JAH), Earnings ESP of 2.00% and a Zacks Rank #1 (Strong Buy)

Read the Full Research Report on MOLX
Read the Full Research Report on SNDK
Read the Full Research Report on JAH
Read the Full Research Report on MCHP

Zacks Investment Research