Qorvo (QRVO) Set to Report Q3 Earnings: What's in the Cards?

Qorvo QRVO is set to report third-quarter fiscal 2020 results on Jan 29.

For the fiscal third quarter, the company anticipates earnings to be $1.67 per share at mid-point. The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at $1.67 per share, unchanged over the past 30 days. The figure indicates a decline of 9.7% from the year-ago quarter’s reported figure.

Qorvo anticipates revenues between $840 million and $860 million. The consensus mark for revenues stands at $850.7 million, which implies growth of 2.2% from the year-ago quarter’s reported figure.

Notably, the company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average positive earnings surprise being 14.8%.

Qorvo, Inc. Price and EPS Surprise

Qorvo, Inc. Price and EPS Surprise

Qorvo, Inc. price-eps-surprise | Qorvo, Inc. Quote

 

Let’s discuss the factors influencing the upcoming quarterly results.

Factors at Play

Qorvo’s third-quarter results are expected to have benefited from continued solid demand for performance-tier for RF Fusion-based solutions, antenna tuning, discrete components and Bulk Acoustic Wave (BAW) based multiplexers.

The company is also likely to have benefited from increased RF content and other solutions at the China-based smartphone OEMs. This along with improved sales of Apple’s iPhone 11 in the December quarter and share gains in Samsung’s portfolio is expected to have contributed to the company’s top-line growth.

Qorvo expects Mobile Products division sales to increase sequentially and return to growth on a year-over-year basis, driven by an increase in 5G handset volumes.

The Zacks Consensus Estimate for third-quarter Mobile Products revenues is pegged at $637 million, indicating growth of 5.8% year over year and 2.2% sequentially.

Further, strong demand for the company’s solutions in defense (advanced radars and other electronic warfare products) and connectivity (Wi-Fi 6 and emerging IoT applications) is a positive. Rapid adoption of GaN for high-power applications, radars and other electronic warfare products is expected to have aided the IDP segment’s revenue growth.

Notably, during the quarter, Qorvo expanded its infrastructure solutions portfolio with dual-band integrated front-end module (FEM) — QPF4800 — designed for Wi-Fi 6 customer premise equipment.

The company also acquired Cavendish Kinetics to strengthen RF microelectromechanical system (MEMS), switching and tuning portfolio.

However, lower sales to Huawei due to the U.S. restrictions are expected to have been a drag on the top line in the to-be-reported quarter.

The Zacks Consensus Estimate for third-quarter Infrastructure & Defense Products revenues is pegged at $214 million, indicating a decline of 7% year over year but growth of 16.3% sequentially.

What Our Model Says

According to the Zacks model, a company with a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates. But that is not the case here.

Qorvo has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Perion Network PERI has an Earnings ESP of +22.58% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

CEVA CEVA has an Earnings ESP of +27.06% and a Zacks Rank #1.

Advanced Energy Industries AEIS has an Earnings ESP of +10.80% and a Zacks Rank #1.

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