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Ultra Clean (UCTT) to Report Q4 Earnings: What's in Store?

Zacks Equity Research

Ultra Clean Holdings, Inc. UCTT is set to report fourth-quarter 2018 results on Feb 21.

The company beat the Zacks Consensus Estimate in one of the trailing four quarters, delivering an average positive surprise of 2.5%.

In the last reported quarter, the company's earnings of 30 cents per share matched the Zacks Consensus Estimate. The figure declined 51.6% from the year-ago quarter. Moreover, revenues declined 3.7% year over year to $234 million and beat the Zacks Consensus Estimate of $224 million by a slight margin.

For the fourth quarter, Ultra Clean expects revenues between $240 million and $260 million and non-GAAP earnings between 22 cents and 32 cents per share.  

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 25 cents per share, indicating year-over-year decline of 57.6%. Further, the consensus mark for revenues is pegged at $248.3 million, down 0.2% from the year-ago quarter.

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

Ultra Clean Holdings, Inc. Price and EPS Surprise

Ultra Clean Holdings, Inc. Price and EPS Surprise | Ultra Clean Holdings, Inc. Quote

Factors Likely to Influence Q4 Results

Ultra Clean acquired Quantum Global Technologies in second-quarter 2018, which added a new recurring revenue stream for the company in the semiconductor ecosystem. Notably, management stated that this acquisition accounted for 20-25% of third-quarter revenues.

Moreover, the global presence of Quantum aided expansion of Ultra Clean’s customer base in the wafer fabrication equipment (WFE) space.

Quantum’s higher-margin operating model is expected to be accretive to Ultra Clean’s cash flow and operating margin in the near term.

The company’s stringent cost cutting is expected to boost profitability. Additionally, Ultra Clean is likely to benefit from continuing momentum in display segment in the to-be reported quarter.

However, declining WFE spend and sluggish semiconductor market environment are expected to hurt the top line as well as profitability in the near term.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.

Ultra Clean has a Zacks Rank #4 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With a Favorable Combination

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

Square, Inc. SQ has an Earnings ESP of +5.95% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gogo Inc. GOGO has an Earnings ESP of +9.46% and a Zacks Rank #3.

Discovery, Inc. DISCA has an Earnings ESP of +4.72% and a Zacks Rank #3.

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Ultra Clean Holdings, Inc. (UCTT) : Free Stock Analysis Report
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