Maxim Integrated (MXIM) Q1 Earnings: What's In The Cards?

Maxim Integrated Products, Inc. (NASDAQ:MXIM) is set to report first-quarter 2017 results on Oct 20. Last quarter, the company posted a positive earnings surprise of 2.08%.

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

Factors to Consider

Maxim Integrated is an original equipment manufacturer (OEM) of semiconductor analog and mixed signal integrated circuits (ICs). The company has a broad range of products that makes it possible to serve a diverse clientele. Maxim’s more than 70 product lines are primarily sold in the consumer, computing, industrial, automotive and communications markets and have extensive application in consumer goods like cordless phones, digital cameras and PDAs; data processing; industrial products; instrumentation products; medical instruments; and various communications gear and networking equipment.

Also, Maxim reorganized its business structure to distribute R&D and sales and marketing resources more efficiently between business units, speed up decision-making, improve interaction and collaboration between business units, and quickly process customer feedback for implementation.

However, the concentration of its mobility revenues at Samsung (KS:005930) is a big concern especially after the Galaxy Note 7 fiasco, which is likely to have an impact on Maxim’s net revenues.

For the fiscal first quarter, Maxim expects revenues in the range of $540 million to $580 million based on a quarter-end backlog of $363.0 million. Gross margin is expected in a range of 61%–63% on a GAAP basis and 63%–65% on an adjusted basis (excluding special items). Earnings per share are expected within 40–46 cents on a GAAP basis and 44–50 cents on an adjusted basis.

Earnings Whispers?

Our proven model does not conclusively show that Maxim will beat estimates this 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.

Zacks ESP: Maxim has an Earnings ESP of 0.00%. Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 47 cents.

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

Stocks to Consider

Here are some companies, which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Amazon.com, Inc. (NASDAQ:AMZN) , slated to report third-quarter earnings results on Oct 27, with an Earnings ESP of +6.98% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Seagate Technology plc (NASDAQ:STX) , with an Earnings ESP of +3.37% and a Zacks Rank #2 (Buy). The company is slated to report first-quarter fiscal 2017 earnings results before the market opens on Oct 19.

Moody's Corporation (NYSE:MCO) , with an Earnings ESP of +1.70% and a Zacks Rank #2. The company is slated to report third-quarter 2016 earnings results before the market opens on Oct 21.

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