Synaptics (SYNA) To Report Q1 Earnings: What's In Store?

Synaptics Inc (NASDAQ:SYNA) is set to report first-quarter fiscal 2017 results on Oct 27. Last quarter, the company posted a positive earnings surprise of 166.67%. Let’s see how things are shaping up for this quarter.

Factors to Consider

Synaptics is primarily engaged in developing human interface solutions for a wide array of mobile computing and communications devices and is one of the leading suppliers of TouchPads to the notebook computer market. The company’s clientele includes Apple Inc. (NASDAQ:AAPL) , Samsung (KS:005930), Huawei and Lenovo among others.

The company remains focused on enhancing its Automotive Solutions and Touch and Display Driver Integration (TDDI) and fingerprint portfolio. We expect the company to benefit from a recovering iPhone market in the to-be reported quarter. Also, ongoing restructuring initiatives and a strong shareholder repurchase plan will cushion the company’s earnings. Moreover, strategic acquisitions like Renesas SP Drivers, which have greatly expanded its offerings, are added positives.

However, intensifying competition and ongoing troubles in China can prove to be a headwind for the company as it derives a significant portion of its revenues from the region.

Earnings Whispers

Our proven model does not conclusively show that Synaptics is likely to beat earnings 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. This is not the case here as you will see below.

Zacks ESP: Synaptics currently has an ESP of 0.00% as the Most Accurate Estimate and the Zacks Consensus Estimate are both pegged at 68 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Synaptics has a Zacks Rank #3, which increases the predictive power of ESP. However, we need to have a positive ESP to be confident of an earnings beat.

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

Stocks to Consider

Here are few stocks that, as per our model, have the right combination of the two key components:

NN Inc. (NNBR) has an Earnings ESP of +4.35% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Mercadolibre, Inc. (NASDAQ:MELI) with an Earnings ESP of +8.24% and a Zacks Rank #1

Amazon.com Inc. (NASDAQ:AMZN) has an Earnings ESP of +10.47% and a Zacks Rank #1.

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