Synaptics To Report (SYNA) Q3 Earnings: What's In The Cards?

Synaptics Inc. (NASDAQ:SYNA) is set to report fiscal third-quarter 2018 results on May 9.

The company beat the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 3.89%.

Last quarter, the company reported earnings of $1.11 per share, down 25.5% from the year-ago quarter and missed the Zacks Consensus Estimate by a penny. Revenues of $430 million also fell short of the Zacks Consensus Estimate of $433 million and declined 6.7% on a year-over-year basis.

For fiscal third-quarter 2018, the company anticipates revenues in the range of $380-–$420 million.

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

Factors at Play

Synaptic is likely to benefit from its diversification strategy. In the last reported quarter, consumer IoT business, which accounted for nearly 25% of total revenues, was a breather.

Notably, the acquisitions of Conexant Systems and Multimedia Solutions Business of Marvell Technology Group are helping it expand its customer base.

In the IoT space, AudioSmart, ImagingSmart and VideoSmart are gaining wide scale adoption. New design wins in IoT are expected to provide further impetus.

Synaptics’ focus on enhancing in-display fingerprint sensing, Touch and Display Driver Integration (TDDI) and OLED DDIC portfolio will help it counter the growing headwinds. The company expects the introduction of chip-on-film to provide new growth opportunity.

However, declining revenues from mobile and PC products continue to hurt. Significant weakness in the China smartphone market coupled with loss of share in Samsung (KS:005930) Galaxy S9 devices is an overhang. The company anticipates a 3% sequential decline in mobile revenues in the soon-to-be reported quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a 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.

Synaptics has a Zacks Rank #3 and its Earnings ESP is -1.27%.

Stocks With a Favorable Combination

Here are some companies, which, as per our model, have the right combination of elements to post an earnings beat this quarter:

Workday, Inc. (NASDAQ:WDAY) has an Earnings ESP of +7.68% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Analog Devices, Inc. (NASDAQ:ADI) has an Earnings ESP of +0.20% and a Zacks Rank #2.

NVIDIA Corporation (NASDAQ:NVDA) has an Earnings ESP of +0.45% and a Zacks Rank #3.

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