Will OmniVision (OVTI) Beat Earnings Ests? - Analyst Blog

We expect OmniVision Technologies, Inc. OVTI to beat expectations when it reports fourth quarter fiscal 2014 results on May 29.

Why a Likely Positive Surprise?

Our proven model shows that OmniVision 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 +50.00%. 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 OmniVision's Zacks Rank #1 and +50.00% ESP makes us very confident about an earnings beat on May 29.

What is Driving the Better Than Expected Earnings?

OmniVision's launch of next-generation, high-performance, power-efficient and higher resolution digital imaging sensors for cameras in mobile devices are expected to lead to a positive earnings surprise in the upcoming quarter.

In particular, OmniVision's recent release of the world's smallest, ultra-compact global shutter sensor is the industry's first global shutter sensor to capture high resolution video at a faster rate, thereby making it a perfect solution for a wide range of space-constrained device and computer vision applications. The recent product launches will drive revenues and improve cost efficiency, thus enhancing margins.

OmniVision has done well in the recent past, consistently beating our estimates. The positive trend is seen in the trailing four-quarter average surprise of 90.6%, which was greatly helped by the 166.7% surprise in the last-reported quarter.

Other Stocks to Consider

OmniVision is not the only firm looking up currently. Investors may also consider these 3 stocks with a positive ESP and a favorable Zacks Rank:

Sanderson Farms, Inc. SAFM, Earnings ESP of +2.44% and Zacks Rank #1

Vail Resorts Inc. MTN, Earnings ESP of +6.14% and Zacks Rank #2 (Buy)

Quanex Building Products Corporation NX, Earnings ESP of +100.00% and Zacks Rank #3 (Hold)