Is Rambus (RMBS) Poised to Beat Earnings Estimates? - Analyst Blog

Rambus Inc. RMBS is set to report first-quarter 2014 results on Apr 21. Last quarter, the company posted an astounding positive earnings surprise of 1300.00%. Let's see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Rambus reported encouraging fourth-quarter results as the bottom line surpassed the Zacks Consensus Estimate and the top line was roughly in line. The company provided a decent guidance for the first quarter of 2014, given modest royalty receipts. We expect first-quarter results to improve, given the ramp up in its business.

For the current quarter, we remain optimistic about the recent licensing deals between Rambus and several semiconductor manufacturers such as Nanya Technology Corporation and Fairchild Semiconductor Corp. In the beginning of 2014, Rambus signed a 10-year licensing agreement with Samsung Electronics.

Thus, these licensing agreements are a recurring revenue source for Rambus — the result of successfully monetizing its patents. Moreover, the company expects to introduce several innovative products and services in 2014 that would support its revenue growth.

Earnings Whispers?

Our proven model does not conclusively show that Rambus will beat earnings 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 1 cent. Hence, the difference is 0.00%.

Zacks Rank: Rambus' Zacks Rank #1 (Strong Buy) 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 you may want to consider as our model shows that it has the right combination of elements to post an earnings beat this quarter:

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

Amazon.com Inc. AMZN has an Earnings ESP of +4.76% and a Zacks Rank #2 (Buy).

Pandora Media, Inc. P has an Earnings ESP of +5.26% and a Zacks Rank #2.