Can Cypress (CY) Keep the Earnings Streak Alive? - Analyst Blog

Cypress Semiconductor Corporation CY is set to report first-quarter 2014 results on Apr 17. Last quarter, it posted a 300% negative surprise. Let's see how things are shaping up for this announcement.

Growth Factors this Past Quarter

The company's fourth-quarter loss of 4 cents per sharewas wider than the Zacks Consensus Estimate loss of 1 cent. Also, revenues were down sequentially due to normal seasonal declines in all divisions. However, revenues were slightly above the Zacks Consensus Estimate of $167 million.

Gross margins of 45.6% were down 300 basis points sequentially due to unfavorable mix and lower volumes.

For the first quarter, Cypress expects revenues in the range of $161.0–$168.0 million, and gross margin to be approximately 51.0%, which will vary with manufacturing product mix. Non-GAAP earnings per share are likely in the range of 5–7 cents.

Earnings Whispers?

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

Zacks ESP:  The Earnings ESP for the stock is 0.00%.

Zacks Rank: Cypresshas a Zacks Rank #3 (Hold) which 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

You could consider other stocks with a positive Earnings ESP and a Zacks Rank #1, 2 or 3 such as:

Helmerich & Payne, Inc. HP, with Earnings ESP of +3.42% and a Zacks Rank #1 (Strong Buy).

Everest Re Group Ltd. RE, with Earnings ESP of +16.67% and a Zacks Rank #1.

Aspen Insurance Holdings Ltd. AHL, with Earnings ESP of +8.70% and a Zacks Rank #1.