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Xilinx (XLNX) to Post Q2 Earnings: What's in the Offing?

Zacks Equity Research

Xilinx XLNX is set to report second-quarter fiscal 2020 results on Oct 24.

The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters but missed the mark once, the average positive surprise being 6.34%.

For second-quarter fiscal 2020, Xilinx projects revenues in the range of $800-$850 million.

The Zacks Consensus Estimate for revenues is pegged at $826.98 million, indicating growth of 10.8% from the year-ago reported figure. The Zacks Consensus Estimate for earnings stands at 92 cents, implying a rise of 5.75% from the prior-year reported number.

Xilinx, Inc. Price and EPS Surprise

Xilinx, Inc. Price and EPS Surprise

Xilinx, Inc. price-eps-surprise | Xilinx, Inc. Quote

A Look at Q1 Results

In the last reported quarter, the company’s earnings of 97 cents per share beat the Zacks Consensus Estimate of 94 cents as well as the year-earlier quarterly figure of 74 cents.

Further, revenues rose 24% year over year to $850 million but missed the Zacks Consensus Estimate of $851 million.

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

Factors at Play

Xilinx’s second-quarter fiscal 2020 results are likely to have been driven by solid growth in the Wireless market, attributable to early 5G production, pre-5G deployments and LTE upgrades.

Growing demand for the company’s 60-nanometer UltraScale+ family is likely to have remained a key driver. The company is also benefiting from strong demand for its Zynq platform, which is boosted by the adoption of MPSoC family in wireless and across core vertical markets.

Moreover, the company anticipates Data center to have revived growth in the quarter under review, backed by an improvement in the advanced memory architecture related business and expansion of business at other hyperscalars.

However, the suspension of shipments to Huawei due to the export ban imposed by the U.S. government is likely to have dented the company’s revenues.

Sluggish automotive sales in China due to the trade tussle are expected to have persisted as a downside. Moreover, order timing and macro issues might have been an overhang on industrial segment while pause in a customer specific program is likely to have deterred TME business.

The impact of Huawei ban and other trade related uncertainties coupled with the company’s usual business variability might reflect on the company’s performance in the upcoming results.

What Our Model Says

The proven Zacks model does not conclusively predict an earnings beat for Xilinx 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 beating estimates. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Xilinx’s Zacks Rank #4 (Sell) and an Earnings ESP of -1.33% make surprise prediction difficult.

Stocks to Consider

Here are some stocks that you may consider as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Arrow Electronics, Inc. ARW has an Earnings ESP of +0.60% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Avnet, Inc. AVT has an Earnings ESP of +2.68% and is Zacks #3 Ranked.

DHI Group, Inc. DHX has an Earnings ESP of +9.09% and a Zacks Rank of 3.

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