Will Top-Line Contraction Impact Qorvo's (QRVO) Q2 Earnings?
Qorvo, Inc. QRVO is set to report second-quarter fiscal 2024 results on Nov 1, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 126.67%. It pulled off a trailing four-quarter earnings surprise of 66.21% on average.
The leading provider of radio frequency (RF) solutions is expected to witness a top-line decline year over year due to weakness in some end markets, inventory corrections and an unfavorable business environment in China. However, the launch of advanced solutions in aerospace, connectivity and power management domains for a wide range of use cases highlights the company’s focus on innovation, which is expected to have cushioned the top line during the quarter.
Factors at Play
In the fiscal second quarter, Qorvo extended its cellular IoT (C-IoT) portfolio by launching a multi-band multi-mode RF front-end module named QM55011. The new solution is likely to have boosted the company's leading position in the market and expedite innovation across low-voltage applications such as smart meters, asset tracking and monitoring, wearables and smart infrastructure. The low power consumption feature and compact design make it suitable for a wide array of applications that require an extended battery life. These developments are likely to have supported the top line during the quarter.
During the quarter, Qorvo announced the launch of the world’s highest-power, compact Ku-Band satellite communications amplifier, the QPA0017. Its smaller footprint, wide instantaneous bandwidth and high RF power give it a significant advantage over other available SATCOM amplifiers. The company also introduced an advanced circuit simulation software named QSPICE, engineered to augment the capabilities of power and analog designers. These product launches are likely to have boosted the net sales during the quarter.
However, the competitive nature of the industry and weakness in some end markets are impacting Qorvo’s margin. A major share of the company’s revenues is derived from very few customers and heavy reliance on the iPhone’s growth trajectory is a significant headwind. The growing trade spat between the United States and China and the restrictions imposed on iPhone usage by government entities in the communist nation will likely impact Qorvo’s revenue growth. Intense competition and high debt burden remain concerns.
Per the Zacks Consensus Estimate, net sales in High-Performance Analog are expected to be $164.5 million in the second quarter of fiscal 2024. Revenues from Advance Cellular are projected at $721.4 million in the to-be-reported quarter. Connectivity and Sensors Group is expected to generate $114.8 million in revenues.
For the September quarter, the Zacks Consensus Estimate for total revenues is pegged at $1,002 million, indicating a decrease from $1,158 million reported in the prior-year quarter. The consensus mark for earnings is pegged at $1.77 cents per share. It reported earnings of $2.66 per share in the year-ago quarter.
Earnings Whispers
Our proven model predicts a likely earnings beat for Qorvo 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 an earnings beat. This is exactly the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +4.46%. The Most Accurate Estimate is pegged at $1.85, while the Zacks Consensus Estimate stands at $1.77. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Qorvo, Inc. Price and EPS Surprise
Qorvo, Inc. price-eps-surprise | Qorvo, Inc. Quote
Zacks Rank: Qorvo currently sports a Zacks Rank #1.
Other Stocks to Consider
Here are some other companies you may want to consider, as our model shows that these, too, have the right combination of elements to post a beat this season:
NVIDIA Corporation NVDA is set to release quarterly numbers on Nov 21. It has an Earnings ESP of +6.93% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Motorola Solutions, Inc. MSI has an Earnings ESP of +0.47% and carries a Zacks Rank of 3. The company is set to report quarterly numbers on Nov 2.
Qualcomm Inc. QCOM has an Earnings ESP of +5.37% and carries a Zacks Rank of 3. The company is set to report quarterly numbers on Nov 1.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Motorola Solutions, Inc. (MSI) : Free Stock Analysis Report
Qorvo, Inc. (QRVO) : Free Stock Analysis Report
