Semtech (SMTC) to Report Q4 Earnings: What's in the Offing? – Zacks.com

Semtech Corporation (SMTC Free Report) is set to report fourth-quarter fiscal 2021 results on Mar 17. In the last reported quarter, the company delivered a positive earnings surprise of 2.2%, on average.

For the fiscal fourth quarter, the Zacks Consensus Estimate for earnings has remained stable at 48 cents per share over the past 30 days. This indicates growth of 20% from the year-ago reported figure.

The consensus mark for revenues is pegged at $158.4 million, implying growth of 14.8% from the year-ago reported figure.

Factors at Play

During the fiscal third quarter, the company reported strong results. The trend is expected to have continued in the to-be-reported quarter due to strength in the Signal Integrity products group, global expansion of cloud and hyperscale data centers, transition to 5G base stations and acceleration of 10 gig PON.

The low power, high range (LoRa) business is expected to have aided the company’s fiscal fourth-quarter performance. As LoRa is ideally suited for applications such as contact tracing, distance tracking, hygiene and health monitoring, as well as occupancy management, the business witnessed steady growth.

During the quarter, Semtech signed a number of deals that are expected to have expanded the adoption of LoRa devices.

In this regard, it is to be noted that its LoRa devices have been deployed by Digital Matter to develop a battery-powered tracking device, Yabby Edge.

Also, Semtech recently announced that its LoRaWAN protocol has been deployed by Alpha-Omega Technology (AO-T) into its metering solution.AO-T’s KLAX line of smart meter helps to increase efficiency in the utility vertical for enterprise and consumer utility management.

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These efforts are likely to have boosted the adoption rate of LoRa technology, which in turn is expected to have driven the top line.

In addition, the growing need for more efficient energy management in home and industrial settings, increasing electronic system requirements for mobile devices, along with the propagation of green standards are likely to have spurred demand in these segments. This is likely to have bolstered its quarterly performance.

However, Semtech has been adversely impacted by heightening competition in the semiconductor space, including slowing demand in China.

The resultant pricing pressure might have dampened the company’s margins and profitability in the fiscal fourth quarter. Moreover, seasonality in the consumer segment might have hampered top-line growth.

Also, geopolitical issues are likely to have affected its performance.

For the fiscal fourth quarter, management expects revenues on a non-gap basis in the range of $153-$163 million.

Non-GAAP gross profit margin is expected within 61-62%. Management projects SG&A expenses within $31-$32 million, and research and development costs of $26.5-$27.5 million. Non-GAAP earnings per share are projected in the range of 45-51 cents.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Semtech this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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Zacks Rank: Currently, Semtech carries a Zacks Rank #3.

Stocks That Warrant a Look

Here are a few stocks worth considering, as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases.

Zumiez Inc. (ZUMZ Free Report) has an Earnings ESP of +0.37% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

FedEx Corporation (FDX Free Report) has an Earnings ESP of +2.72% and a Zacks Rank #2.

Bed Bath & Beyond Inc. (BBBY Free Report) , a Zacks #3 Ranked stock, has an Earnings ESP of +27.52%.

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