Cabot Microelectronics Earnings Preview

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Investors are bracing for the worst and waiting to see if Cabot Microelectronics (NAS: CCMP) will fall short of Wall Street forecasts for the third consecutive quarter. The company will unveil its latest earnings on Thursday, Jan. 26. Cabot Microelectronics is a supplier of high-performance polishing slurries used in the manufacture of advanced integrated circuit devices within the semiconductor industry, in a process called chemical mechanical planarization.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Cabot Microelectronics with two out of three analysts rating it a hold. Analysts don't like Cabot Microelectronics as much as competitor Tessera Technologiesoverall. One out of two analysts rate Tessera Technologies a buy compared to one out of three for Cabot Microelectronics. Cabot Microelectronics' rating hasn't changed over the past three months.
  • Revenue forecasts: On average, analysts predict $106 million in revenue this quarter. That would represent a decline of 7.2% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.47 per share. Estimates range from $0.46 to $0.47.

What our community says:
CAPS All-Stars are solidly backing the stock, with 94.4% awarding it an outperform rating. The community at large backs the All-Stars, with 88.1% giving it a rating of outperform. Fools are bullish on Cabot Microelectronics, though the message boards have been quiet lately, with only 24 posts in the past 30 days. Despite the majority sentiment in favor of Cabot Microelectronics, the stock has a middling CAPS rating of three out of five stars.

Management:
Cabot Microelectronics' profit has risen year over year by an average of 8.2% over the past five quarters. A year-over-year revenue decrease last quarter breaks a streak of three consecutive quarters of revenue increases. The company's gross margin shrank by 2.3 percentage points in the last quarter. Revenue fell 0.5% while cost of sales rose 3.9% to $58.8 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

Q4

Q3

Q2

Q1

Gross Margin

46.4%

47.4%

48.1%

50.3%

Operating Margin

15.4%

17.6%

17.7%

21.4%

Net Margin

8.5%

11.4%

11.9%

14.4%

For all our Cabot Microelectronics-specific analysis, including earnings and beyond, add Cabot Microelectronics to My Watchlist.

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Earnings estimates provided by Zacks.

At the time this article was published

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