Can A Diverse Portfolio Lift Maxim's (MXIM) Earnings In Q3?

Maxim Integrated Products Inc. (NASDAQ:MXIM) is set to report third-quarter fiscal 2018 results on Apr 26.

The company topped the Zacks Consensus Estimate in the trailing four quarters, with an average beat of 4.99%.

Last quarter, Maxim delivered a positive earnings surprise of 1.56%. Earnings of 65 cents per share increased 42% from the year-ago quarter and 9% sequentially.

Revenues increased 13% year over year and 8.2% sequentially to $623 million, driven by strength in the automotive and industrial end markets.

For third-quarter fiscal 2018, Maxim expects revenues in the range of $620-$660 million based on a quarter-end backlog of $446 million. Adjusted earnings are expected between 66 cents and 72 cents per share.

Shares of Maxim have returned 21.6% over a year, outperforming the industry’s rally of 11.9%.

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

Product Portfolio to Drive End Market Results

Maxim’s well-diversified product portfolio is helping the company perform well in all its end markets, especially in the automotive and industrial sectors. Moreover, it is helping the company to win clients and expand globally.

The products launched as part of the company’s transition to advanced node process technology development are likely to expand margins.

The automotive market is likely to perform well, driven by continued growth in battery management system business. Significant investments in vehicle-safety technology also bode well.

During the fiscal second quarter, the company entered into a partnership with NVIDIA Corporation (NASDAQ:NVDA) to support the latter’s DRIVE Pegasus as well as DRIVE Xavier for Level 4 driving platforms.

Moreover, the industrial market is expected to be up sequentially and from the year-ago quarter, driven by strength in factory automation content.

Reportedly, Maxim's Ultra-Small Step-Down Converters — MAX20075 and MAX20076 — offer the industry's lowest quiescent current which helps the system designers who are looking to create small and highly efficient 40V load dump-tolerant applications.

Recently, MAXM17532 and MAXM15462 power modules have been proved to help the designers working on space-constrained applications in reducing solution size and increase efficiency.

Also, the communications and data center market is likely to be up in the soon-to-be reported quarter.

However, weakness in the smartphone market and high dependence on Samsung (KS:005930) poses significant threat to the company’s revenue from the consumer end market.

Maxim Integrated Products, Inc. Price and EPS Surprise

Maxim Integrated Products, Inc. Price and EPS Surprise | Maxim Integrated Products, Inc. Quote

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Maxim's Earnings ESP is +1.10% but it has a Zacks Rank #4. Therefore, our proven model does not show an earnings beat for the company this quarter.

Stocks That Warrant a Look

Here are a few other stocks worth considering as our model shows that these too have the right combination of elements to deliver an earnings beat in the upcoming releases.

Western Digital (NASDAQ:WDC) has an Earnings ESP of +2.3% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agilent Technologies (NYSE:A) has an Earnings ESP of +3.72% and a Zacks Rank #2.

Advanced Micro Devices (NASDAQ:AMD) has an Earnings ESP of +1.19% and a Zacks Rank #3.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>