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SMTC (SMTX) to Report Q4 Earnings: What's in the Offing?

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Zacks Equity Research
·3 min read
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SMTC Corporation SMTX is scheduled to report fourth-quarter 2019 results on Mar 13.

For the fourth quarter, the Zacks Consensus Estimate for revenues is pegged at $89 million, indicating growth of 10.1% from the prior-year reported figure.

Further, the consensus mark for earnings per share stands at 3 cents per share, which suggests an improvement of 50% from the year-ago reported number.

The company’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing the same in the other two. The average positive surprise is 168.18%.

Let’s see how things are shaping up prior to this announcement.

SMTC Corporation Price and EPS Surprise

SMTC Corporation Price and EPS Surprise
SMTC Corporation Price and EPS Surprise

SMTC Corporation price-eps-surprise | SMTC Corporation Quote

Factors at Play

SMTC’s strengthening footprint in the new end-markets is likely to have bolstered its customer base in the soon-to-be-reported quarter.

We note that a solid momentum in the company’s Industrial, Power and Clean Technology business is expected to have boosted the Test and Measurement revenues during the fourth quarter.

Further, a growing momentum across the Aerospace and Defense market is anticipated to have aided the company in winning customers in the quarter under review.

All these positives along with the rising traction from medical customers are expected to have contributed well to top-line growth in the fourth quarter. Also, increasing business wins are likely to have driven the top line further.

Additionally, growth opportunities regarding 5G are expected to have been constant tailwinds. Buoyant demand for SMTC’s products required in 5G implementation is anticipated to have bumped up its revenues in the telecom, networking and communications sector in the to-be-reported quarter.

Further, benefits of the new NPI facility and the Manufacturing Center of Excellence in Billerica that offer quick-turn manufacturing might reflect on the company’s fourth-quarter results.

Furthermore, the MC Assembly buyout is likely to have improved the production scales and operational activities of the company in the quarter under review.

However, the ongoing macroeconomic challenges in the electronics manufacturing services (EMS) market are likely to have affected the company’s fourth-quarter performance.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for SMTC 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

SMTC has an Earnings ESP of 0.00% and a Zacks Rank #3.

Stocks to Consider

Here are some stocks worth considering as our proven model shows that these have the right combination of elements to beat on earnings this season.

Micron Technology, Inc. MU has an Earnings ESP of +5.05% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

lululemon athletica inc. LULU has an Earnings ESP of +0.27% and a Zacks Rank of 2.

Darden Restaurants, Inc. DRI has an Earnings ESP of +1.03% and a Zacks Rank of 3.

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