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What's in Store for Applied Materials' (AMAT) Q4 Earnings?

Zacks Equity Research

Applied Materials, Inc. AMAT is set to report fiscal fourth-quarter 2019 results on Nov 14. In the last reported quarter, it delivered a positive earnings surprise of 5.71%.

The Zacks Consensus Estimate for earnings has remained stable at 76 cents over the past 30 days. The figure indicates a decline of 21.7% from the year-ago reported figure.

Notably, the consensus mark for revenues is pegged at $3.69 billion, implying a decline of 8.1% from the year-ago reported figure.

Performance in the Last Reported Quarter

In third-quarter fiscal 2019, earnings of 74 cents per share surpassed the Zacks Consensus Estimate by 4 cents. The figure improved 5.7% sequentially but declined 28.8% year over year.

Revenues decreased 14.4% from the year-ago quarter to $3.562 billion. However, the figure surpassed the Zacks Consensus Estimate of $3.526 billion.

Let’s see how things have shaped up for this announcement.

Applied Materials, Inc. Price, Consensus and EPS Surprise

 

Applied Materials, Inc. Price, Consensus and EPS Surprise

Applied Materials, Inc. price-consensus-eps-surprise-chart | Applied Materials, Inc. Quote

Strong Demand for Services

The company has been efficiently delivering key enabling technology to logic and foundry customers, given well-differentiated products along with high market share. Service is an important part of Applied Materials’ portfolio that is likely to have aided the to-be-reported quarter.

The Applied Global Services (AGS) segment is expected to have performed well in the quarter to be reported, driven by improved device and yield performance.

The Zacks Consensus Estimate for revenues from AGS for the fiscal fourth quarter is pegged at $959 million, indicating 3% year-over-year growth. The same for Semiconductor Systems Group is pegged at $2.25 billion, suggesting 1% year-over-year improvement for the to-be-reported quarter.

Strength in Display to Drive Revenues

The Display segment’s performance is expected to have been driven by significant opportunities, courtesy of investment in areas such as artificial intelligence, big data, cloud infrastructure, Internet of Things, virtual reality and smart vehicles.

The Zacks Consensus Estimate for the segment’s revenues for the quarter to be reported is pegged at $458 million, implying 35.1% year-over-year increase.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Applied Materials this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Applied Materials has a Zacks Rank #3.

Stocks That Warrant a Look

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

Pinduoduo, Inc. PDD has an Earnings ESP of +25.00% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Eyenovia, Inc. EYEN has an Earnings ESP of +10.51% and a Zacks Rank #2.

Momo Inc. MOMO has an Earnings ESP of +3.94% and a Zacks Rank #3.

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