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Xilinx (XLNX) to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research

Xilinx XLNX is scheduled to report fourth-quarter fiscal 2019 results on Apr 24.

The company beat the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 5.7%.

The company is witnessing robust growth in its SoC products. Moreover, strength across applications and communications, automotive, particularly in ADAS, as well as industrial end markets were key drivers in the last reported quarter.

For the fiscal fourth quarter, Xilinx projects revenues in the range of $815-$835 million. The Zacks Consensus Estimate stands at $825.6 million, indicating growth of 22.7% from the year-ago reported figure.

Let’s see how things are shaping up for the upcoming announcement.

Factors at Play

Xilinx is benefiting from strength across Wireless Communications, Aerospace and Defense, Data Center plus Test Measurement and Emulation markets (TME), which is buoying its near-term prospects. This uptrend is likely to continue in the fiscal fourth quarter. The company expects to witness particular strength in TME in the quarter.

In the to-be-reported quarter, the company expects particular strength in the Wireless market. Acceleration in deployments in Korea and China is likely to reflect positively in its upcoming results.

We are optimistic about the surge in demand for Xilinx’s Ultrascale+ FPGAs among data-center operators for providing FPGA-as-a-Service (FaaS). Its FaaS deployments with Amazon’s AMZN cloud arm AWS, Alibaba BABA and Huawei are expected to boost results.

Xilinx’s ongoing transformation from an FPGA provider to a platform company is well on track with continued penetration of its 28-nanometer and 16-nanometer Zynq SoC products. Strength in ADAS demand, applications and communications markets is expected to benefit its fiscal fourth-quarter results.

Increase in operating expenses due to higher employee compensation and higher mask and wafer expenses is expected to keep margins under pressure.

Moreover, a decline in revenues from products in the Industrial, A&D, Automotive, Broadcast and Consumer end markets is expected due to low demand in those areas.

Xilinx, Inc. Price and EPS Surprise

Xilinx, Inc. Price and EPS Surprise | Xilinx, Inc. Quote

What the Zacks Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Xilinx has a Zacks Rank #2 and its Earnings ESP is +1.75%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stock to Consider

Here is another stock which you may consider as our model shows that it has the right combination of elements to post an earnings beat in their upcoming release:

Acacia Communications, Inc. ACIA has an Earnings ESP of +5.73% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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