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Synaptics (SYNA) to Post Q4 Earnings: What's in the Cards?

Zacks Equity Research

Synaptics SYNA is scheduled to report fourth-quarter fiscal 2020 results on Aug 5.

For the fiscal fourth quarter, the company expects revenues between $260 million and $290 million. The Zacks Consensus Estimate for revenues is pegged at $278.4 million, indicating a year-over-year decline of 5.7%.

The Zacks Consensus Estimate for earnings is pinned at $1.09 per share, suggesting a jump of 186.8%, year on year.

The company’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters, the average surprise being 33.1%.

Synaptics Incorporated Price and Consensus

Synaptics Incorporated Price and Consensus
Synaptics Incorporated Price and Consensus

Synaptics Incorporated price-consensus-chart | Synaptics Incorporated Quote

Factors at Play

Synaptics’s fiscal fourth-quarter performance is likely to have benefited from a healthy backlog of $240 million, as noted by management in its last earnings call. Moreover, solid bookings, a growing customer base and healthy product sell-in and sell-through patterns are expected to have been key growth drivers.

The company’s market-leading position for both touchpads and secure fingerprint sensors in the PC market makes us optimistic about the upcoming quarterly release. The new design momentum with its OLED touch sensors is also likely to have benefited the top line during the to-be-reported quarter.

Moreover, Synaptics is a display component supplier of Apple (AAPL), which witnessed an increase in iPhone and Mac sales during the June-end quarter. This is likely to have benefited Synaptics as well.

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

Further, Synaptics’ focus on controlling operating expenses with a more disciplined spending and selective project investments is likely to have boosted profitability. The company’s cost-saving initiatives are expected to have resulted in a non-GAAP gross margin of 45-47%, as projected by the company, marking the fourth consecutive quarter with a gross margin above 40%.

However, macroeconomic woes, thanks to the coronavirus pandemic, were key concerns during the quarter under review.

What Our Model Says

Our proven model predicts an earnings beat for Synaptics this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Synaptics currently carries a Zacks Rank of 2 and has an Earnings ESP of +10.66%.

Other Stocks With Favorable Combinations

Here are some other companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Cogent Communications Holdings CCOI has an Earnings ESP of +11.66% and carries a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Benefitfocus BNFT has an Earnings ESP of +6.25% and carries a Zacks Rank of 2, currently.

LivePerson LPSN has an Earnings ESP of +23.81% and currently carries a Zacks Rank of 3.

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