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Semtech (SMTC) to Report Q2 Earnings: What's in the Offing?

Zacks Equity Research
·4 mins read

Semtech Corporation SMTC is set to report second-quarter fiscal 2021 results on Aug 26. In the last reported quarter, the company delivered an average earnings surprise of 9.4%.

For the fiscal second quarter, the Zacks Consensus Estimate for earnings has remained stable at 40 cents per share over the past 30 days. This indicates growth of 5.3% from the year-ago reported figure.

Notably, the consensus mark for revenues is pegged at $139.63 million, implying growth of 1.8% from the year-ago reported figure.

Let’s see how things have shaped up for this announcement.

Semtech Corporation Price and EPS Surprise

Semtech Corporation Price and EPS Surprise
Semtech Corporation Price and EPS Surprise

Semtech Corporation price-eps-surprise | Semtech Corporation Quote

Factors at Play

The global expansion of cloud and hyperscale data centers, transition to 5G base stations and acceleration of 10 gig PON are expected to have benefited the company’s SIP product group, thereby helping it to boost top-line growth in the quarter under review.

The company’s LoRa business is expected to aid the upcoming results amid the COVID-19 pandemic. As LoRa is ideally suited for applications such as contact tracing, distance tracking, hygiene and health monitoring, as well as occupancy management, the company is expected to have seen further growth in the LoRa business.

During the quarter, Semtech signed a number of deals that are expected to have expanded the adoption of Low power, high Range (LoRa) devices. In this regard, it is worth mentioning that Everynet used the geolocation and asset tracking capabilities of Semtech’s LoRa devices.

In addition, the growing need for more efficient energy management in home and industrial settings, increasing electronic system requirements for mobile devices, along with the propagation of green standards are likely to have spurred demand in these segments, thereby bolstering its quarterly performance.

However, Semtech has been adversely impacted by heightening competition in the semiconductor space, including slowing demand in China.

The resultant pricing pressure might have dampened the company’s margins and profitability in the fiscal second quarter. Moreover, seasonality in the consumer segment may have hampered top-line growth.

Also, geopolitical issues are likely to impact its results.

For the fiscal second quarter, management expects revenues on a non-gap basis in the range of $138-$146 million.

Non-GAAP gross profit margin is expected within 61.2-62%. Management projects SG&A expenses within $28.5-$29.5 million, and research and development costs of $24.5-$25.5 million. Non-GAAP earnings per share are projected in the range of 40-44 cents.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Semtech this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Semtech carries a Zacks Rank #3.

Stocks That Warrant a Look

Here are a few stocks worth considering, as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases.

Autodesk ADSK has an Earnings ESP of +4.44% and carries a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ambarella AMBA has an Earnings ESP of +100.00% and carries a Zacks Rank of 3, at present.

Nutanix NTNX has an Earnings ESP of +5.71% and currently carries a Zacks Rank of 3.

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Autodesk, Inc. (ADSK) : Free Stock Analysis Report
Semtech Corporation (SMTC) : Free Stock Analysis Report
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