Sigma Designs Earnings Preview

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Sigma Designs (NAS: SIGM) will look to avoid missing estimates for the third consecutive quarter when its earnings are released. The company will unveil its latest earnings on Wednesday, Nov. 30. Sigma Designs is engaged in integrated system-on-chip solutions for the Internet protocol television, connected media player, connected home technologies, and other markets.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Sigma Designs, with four out of six analysts rating it a hold. Analysts don't like Sigma Designs as much as competitor Silicon Image overall. Four out of four analysts rate Silicon Image a buy compared to two out of six for Sigma Designs. Sigma Designs' rating hasn't changed over the past three months.
  • Revenue forecasts: On average, analysts predict $42.9 million in revenue this quarter. That would represent a decline of 44.8% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is a loss of $0.35 per share. Estimates range from a loss of $0.38 to a loss of $0.32.

What our community says:
CAPS All-Stars are solidly behind the stock, with 98% awarding it an outperform rating. The community at large agrees with the All-Stars, with 97.1% assigning it a rating of outperform. Fools are gung-ho about Sigma Designs and haven't been shy with their opinions lately, logging 510 posts in the past 30 days. Sigma Designs has a bullish CAPS rating of five out of five stars that is about on par with the Fool community assessment.

Management:
Revenue has fallen in the past two quarters. The company's gross margin shrank by 19.9 percentage points in the last quarter. Revenue fell 36.3% while cost of sales fell 12.1% to $33.7 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

27.8%

49.1%

49.4%

49.6%

Operating Margin

(48.1%)

(9.5%)

1.8%

6.4%

Net Margin

(47%)

(9.4%)

3.5%

6.5%

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Earnings estimates provided by Zacks.

At the time this article was published

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