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What's in Store for Lam Research (LRCX) This Earnings Season?

Zacks Equity Research

Lam Research Corporation LRCX is slated to report fourth-quarter fiscal 2019 results on Jul 31. In the last reported quarter, the company delivered a positive earnings surprise of 9.47%.

Lam Research’s surprise history has been pretty impressive. The company surpassed estimates in each of the trailing four quarters, with the averagebeing 6.56%.

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

Factors to Consider

Lam Research has been witnessing increased adoption rates for 3D NAND technology, FinFETs and multi-patterning. The company has been undertaking cost-reduction activities and density scaling for 3D NAND, as well as new memory technologies. All these factors are likely to positively impact its top line.

For the quarter to be reported, the company expects revenues to be approximately $2.35 billion (+/- $150 million). The Zacks Consensus Estimate for the same is pegged at $2.35 billion.

Volatility in the PC market remains a major concern. Weakness in PCs, which may offset the expansion in the 3D NAND, is likely to affect its fiscal fourth-quarter results.

The company faces significant competition in all its product and service categories in the semiconductor capital equipment market.

Lam Research Corporation Price and EPS Surprise

 

Lam Research Corporation Price and EPS Surprise

Lam Research Corporation price-eps-surprise | Lam Research Corporation Quote

Earnings Whispers

Our proven model shows that Lam Research is unlikely to beat estimates in the to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Earnings ESP: The company has 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.

Zacks Rank: Currently, Lam Research has a Zacks Rank #3.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks That Warrant a Look

Here are a couple of stocks that you may want to consider, as our model shows that these have the right combination of elements to post a positive earnings surprise in the quarter to be reported.

Groupon, Inc. GRPN has an Earnings ESP of +25.00% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Grubhub Inc. GRUB has an Earnings ESP of +12.04% and a Zacks Rank #3.

Itron, Inc. ITRI has an Earnings ESP of +4.17% and holds a Zacks Rank #3.

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