Leading semiconductor manufacturer Qorvo, Inc. QRVO is scheduled to report second-quarter fiscal 2016 results after the closing bell on Nov 5. In the last reported quarter, adjusted earnings woefully missed the Zacks Consensus Estimate by 20 cents. Let’s see how things are shaping up for this announcement.

Key Factors in the Second Quarter

Qorvo is leveraging the industry’s most comprehensive product portfolio, advanced packaging technologies, and system-level expertise to quickly introduce highly integrated front-end solutions that simplify and accelerate the implementation of multimode, multi-band 4G smartphones and tablets. These new RF Fusion front-end solutions showcase Qorvo's ability to help leading OEMs to launch their next-generation flagship devices more quickly. RF Flex delivers the best-in-class current consumption to enable superior device performance and leading-edge design flexibility to simplify regional customization. Qorvo's RF Flex solutions have been selected to support multiple upcoming leading 4G reference designs. This is likely to augment its revenues in the soon-to-be-reported quarter.

At the same time, Qorvo is expected to improve its financial performance as it aims to invest in building a wider technology, supporting better-than-industry growth, greater diversification, a richer mix of new products and an expanding gross margin. The company offers advanced gallium nitride solutions for various applications, and foundry services to support radar, next generation base stations, optical communications and the Internet of Things. With steady improvements in the aerospace sector, orders are likely to increase and supplement its top-line growth.

Qorvo is creating new growth opportunities in three large global markets, namely, mobile devices, network infrastructure and aerospace/defense. This is expected to be a boon for the overall industry as a huge talent pool and combined resources will spearhead technological innovation. The combination will also offer higher data throughput for the overall benefit of carriers and consumers and reap synergistic benefits for the company for holistic growth.

Earnings Whispers

Our proven model shows that Qorvo is likely to beat earnings this quarter as it possesses the key ingredients for a success recipe.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at +2.35%. This indicates a likely earnings beat for the company.

Zacks Rank: Qorvo’s Zacks Rank #3 (Hold) combined with a positive ESP increases the predictive power of ESP. Note that stocks with a Zacks Ranks of #1 (Strong Buy), #2 (Buy) or #3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.  

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat this quarter:

Callon Petroleum Co. CPE has an Earnings ESP of +66.67% and carries a Zacks Rank #2.

Aquinox Pharmaceuticals Inc. AQXP has an Earnings ESP of +43.90% and holds a Zacks Rank #1.

Merrimack Pharmaceuticals, Inc. MACK has an Earnings ESP of +2.44% and carries a Zacks Rank #3.

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