Synopsys Inc. (SNPS) is set to report fourth-quarter fiscal 2013 results on Dec 4. Last quarter, it posted a positive surprise of 38.2%. Let’s see how things are shaping up for this announcement.
Factors This Past Quarter
We believe Synopsys’ recent product launches and deal wins will boost results, going ahead. Moreover, the unique intellectual properties and global support provided by the company will likely drive its forthcoming results. Furthermore, the company provided encouraging guidance. The company has a good cash reserve that is necessary for funding further acquisitions.
Our proven model does not conclusively show that Synopsys is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, that is not the case here due to the following factors:
Zacks ESP: ESP for Synopsys is 0.00% since the Most Accurate estimate stands at 35 cents per share, which is in line with the Zacks Consensus Estimate.
Zacks Rank: Synopsys’ Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.
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 that they have the right combination of elements to post an earnings beat this quarter:
SanDisk Corp. (SNDK), with Earnings ESP of +2.04% and a Zacks Rank #1 (Strong Buy).
The Kroger Co. (KR), with Earnings ESP of +1.89% and a Zacks Rank #2 (Buy).
Five Below, Inc. (FIVE), with Earnings ESP of +25.0% and a Zacks Rank #2 (Buy).