Will ON Semiconductor (ONNN) Beat Earnings Ests? - Analyst Blog

We expect ON Semiconductor Corp. ONNN to beat expectations when it reports first quarter 2014 results on May 1.

Why a Likely Positive Surprise?

Our proven model shows that ON Semiconductor is likely to beat estimates because it has the right combination of two key ingredients.

Positive Zacks ESP: Earnings Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +6.67%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #1 (Strong Buy): Note that stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and #5) should never be considered going into an earnings announcement.  

The combination of ON Semiconductor's Zacks Rank #1 and +6.67% ESP makes us very confident about a positive earnings beat on May 1.

What's Driving the Better Than Expected Earnings?

ON Semiconductor's launch of new products and numerous design wins in communication, automotive and industrial markets are expected to lead to a positive earnings surprise in the upcoming quarter.

Moreover, ON Semiconductor's recent acquisition of Truesense Imaging, Inc. will make it the chief supplier of a wide range of high-geared image sensors for applications in the high-margin industrial end-market. Thus, the deal will prove to be accretive to both margins and earnings. The positive trend is seen in the trailing four-quarter average surprise of 17.6%, which was greatly helped by the 21.4% surprise in the last-reported quarter.

Other Stocks to Consider

ON Semiconductor is not the only firm looking up this earnings season. We also see likely earnings beats coming from these 3 technology sector peers:

• Advanced Energy Industries, Inc. AEIS, Earnings ESP of +10.00% and Zacks Rank #1 (Strong Buy)
• Intuit Inc. INTU, Earnings ESP of +1.18% and Zacks Rank #2 (Buy)
• Marvell Technology Group Ltd. MRVL, Earnings ESP of +6.67% and Zacks Rank #2