Microsemi Earnings Preview

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Microsemi (NAS: MSCC) only managed to meet estimates last quarter, but investors hope it will surpass expectations this quarter. The company will unveil its latest earnings tomorrow. Microsemi is a designer, manufacturer, and marketer of high-performance analog and mixed-signal integrated circuits and high-reliability semiconductors.

What analysts say

  • Buy, sell, or hold?: Analysts strongly back Microsemi, with 10 of 11 rating it a buy and the remainder rating it a hold. Analysts like Microsemi better than competitor Semtech overall. Analysts still rate the stock a moderate buy, but they are a bit more wary about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $216.1 million in revenue this quarter. That would represent a rise of 58.9% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.42 per share. Estimates range from $0.41 to $0.42.

What our community says
CAPS All-Stars are solidly backing the stock with 91.4% giving it an outperform rating. The community at large agrees with the All-Stars with 89.2% granting it a rating of outperform. Fools are keen on Microsemi, though the message boards have been quiet lately with only 26 posts in the past 30 days. Microsemi's bearish CAPS rating of two out of five stars falls short of the Fool community sentiment.

Management
The company's gross margin shrank by 2.7 percentage points in the last quarter. Revenue rose 75.5% while cost of sales rose 84.6% to $114.9 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

44.6%

51.5%

49.1%

48.4%

Operating Margin

(4.0%)

3.4%

11.2%

10.2%

Net Margin

(8.2%)

(0.7%)

4.3%

24.3%

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At the time this article was published

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