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Synaptics (SYNA) to Post Q2 Earnings: What's in the Cards?

Zacks Equity Research

Synaptics SYNA is slated to release second-quarter fiscal 2020 results on Feb 6.

For the fiscal second quarter, the company expects revenues between $345 million and $365 million. The Zacks Consensus Estimate is pegged at $344.5 million, indicating a drop of 16.66% from the year-ago reported figure.

The Zacks Consensus Estimate for earnings stands at $1.44, suggesting a decline of 7.1% from the year-earlier reported number.

The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 29.19%.

Synaptics Incorporated Price and EPS Surprise

Synaptics Incorporated Price and EPS Surprise

Synaptics Incorporated price-eps-surprise | Synaptics Incorporated Quote

Let’s see how things are shaping up for the upcoming announcement.

Factors at Play

Synaptics’s second-quarter fiscal 2020 results are likely to reflect the growing adoption of its products among many of its tier-one OEM customers.

The company’s market leading position for both touchpads and secure fingerprint sensors in the PC market makes us optimistic about the impending quarterly release. New design wins across all the OEM leaders including Dell, HP and Lenovo are likely to have been a constant catalyst.

Additionally, with respect to the IoT business, the company’s solid prospects in the automotive segment and in edge SoC are anticipated to have been a tailwind.

Moreover, Synaptics’s focus on controlling operating expenses with more disciplined spends and selective project investments is expected to have boosted profitability. Further, contribution from high-end products in the Mobile segment might have driven the gross margin.

However, macroeconomic perils, given the highly volatile trade environment, persist as a key concern this earnings season.

Synaptics’s performance in the last reported quarter was driven by continued strength at Huawei. However, the company took a conservative view for Huawei exposure in the December quarter. Therefore, it remains to be seen that how much impact Huawei can make in the to-be-reported results.

Moreover, a fierce competition in the low-end of the Mobile market might have been a lingering headwind.

What Our Model Says

The proven Zacks model does not conclusively predict an earnings beat for Synaptics this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. 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.

Synaptics’s Zacks Rank of 1 and an Earnings ESP of 0.00% make surprise prediction difficult.

Stocks to Consider

Here are some stocks worth considering as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

CDW Corporation CDW has an Earnings ESP of +2.34% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

CEVA CEVA has an Earnings ESP of +27.06% and is Zacks #1 Ranked.

Silicon Motion Technology Corporation SIMO has an Earnings ESP of +5.88% and is #1 Ranked.

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