What's in Store for Xilinx (XLNX) This Earnings Season?

Xilinx Inc. XLNX is set to report first-quarter 2016 results on Jul 22. Last quarter, the company posted a positive earnings surprise of 16%. Let's see how things are shaping up for this announcement.

Factors to Consider

Xilinx reported mixed fourth-quarter results wherein the bottom line beat the Zacks Consensus Estimate but the top line missed. Also, the company saw a year-over-year decline in revenues mainly due to dismal sales at its communications and other divisions.

However, increasing demand for 28-nm nodes, driven by higher wireless deployments and strength in the wired communication segment, are expected to remain growth drivers. The company's product launches are expected to boost revenues.

Nonetheless, delays in China LTE deployments and higher spending on research and development, and selling, general and administrative activitiescould impact the company's near-term results. Also, stiff competition from Altera Corp. ALTR remains a headwind.

Earnings Whispers

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

Zacks ESP: Earnings ESP for Xilinx is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 53 cents.

Zacks Rank: Xilinx carries a Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some 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:

Apple Inc. AAPL, with an Earnings ESP of +2.78% and a Zacks Rank #2 (Buy)

Amazon.com Inc. AMZN, with an Earnings ESP of +33.33% and a Zacks Rank #2