Will Omnivision (OVTI) Beat Earnings Estimates?

Zacks Equity Research

Omnivision Technology Inc. (OVTI) is set to report second-quarter fiscal 2014 results on Nov 25. Last quarter it had posted a 44.8% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

In the first quarter of fiscal 2014, Omnivision beat the Zacks Consensus Estimate by 13 cents. Revenues were above the midpoint of management’s guidance range of $355 million–$390 million but missed the Zacks Consensus Estimate of $376.6 million due to the weak smartphone market. The decrease in gross margin was due to inventory adjustments, partially offset by manufacturing cost cuts.

For the second quarter of 2014, OmniVision expects revenues in the range of $375 million–$410 million, GAAP earnings per share in the range of 21 cents–38 cents and non-GAAP earnings, excluding share-based compensation and the associated tax impact, in the range of 36 cents–53 cents a share.

Earnings Whispers?

Our proven model does not conclusively show that Omnivision is likely to beat earnings.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 29 cents. Hence, the difference is 0.0%.

Zacks Rank #3 (Hold): Note that stocks with a Zacks Rank of #1, 2 and 3 have a significantly higher chance of beating earnings. However, the combination of Omnivision’s Zacks Rank #3 and 0.0% Earnings ESP makes surprise prediction difficult.

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.

Other Stocks to Consider

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

Kroger Co (KR), earnings ESP of +1.89% and a Zacks Rank #2 (Buy).

Five Below Inc (FIVE), earnings ESP of +25.00% and a Zacks Rank #2 (Buy).

Protalix Biotherapeutics Inc (PLX), earnings ESP of +25.00% and a Zacks Rank #2 (Buy).

Read the Full Research Report on PLX
Read the Full Research Report on KR
Read the Full Research Report on OVTI
Read the Full Research Report on FIVE


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