Will Linear Technology (LLTC) Miss Earnings Estimates? - Analyst Blog

Linear Technology Corporation LLTC is set to report third-quarter fiscal 2014 results on Apr 15. Last quarter, it posted a 4.6% positive surprise. Let's see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Linear posted mixed second quarter results with the bottom line surpassing the Zacks Consensus Estimate while the top line missed. The sequential revenue decline of 1.7% was attributable to weak sales in the industrial market. However, the book-to-bill ratio was slightly positive in the quarter.

While Linear's business is well-diversified among core markets, such as industrial, automotive and communications infrastructure, its computing business has been hit by weakness in the PC and notebook markets.

Management expects improved bookings momentum in automotive and industrial markets in the near term, indicating stronger revenues in the upcoming quarter.

However, uncertainty in its core industrial, communications infrastructure and automotive businesses coupled with competition from companies like Texas Instruments Inc. TXN remain an overhang.

Earnings Whispers?

Our proven model does not conclusively show that Linear Technology will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 46 cents. Hence, the difference is 0.00%.

Zacks Rank: Linear Technology's Zacks Rank #3 (Hold), when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #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, 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:

E-Commerce China Dangdang Inc. DANG, with Earnings ESP of +33.33% and a Zacks Rank #1 (Strong Buy).

ON Semiconductor Corp. ONNN, with Earnings ESP of +6.67% and a Zacks Rank #1.