Most analysts are predicting a strong quarter for Advanced Micro Devices, Inc. (NYSE:AMD). With the unveiling of Microsoft (NASDAQ:MSFT) and Sony’s (NYSE:SNE) respective gaming platforms, the Xbox One and Play Station 4, AMD has been successful with both gaming platforms projected to do well in the upcoming year. In addition, in the PC graphics card industry, AMD has also pulled past its closest competitor NVIDIA (NASDAQ:NVDA) recently by unveiling graphics cards that are not only more cost efficient but also better capable of handling heavy graphics loads.
AMD is expected to report FQ4 2013 earnings on Tuesday, January 21st. The information below is derived from data submitted to the Estimize platform by a set of Buy Side and Independent analyst contributors.
The current Wall Street consensus expectation is for AMD to report $0.06 EPS and $1.538B revenue while the current Estimize consensus from 9 Buy Side and Independent contributing analysts is $0.08 EPS and $1.569B revenue. The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case, we’re seeing a smaller differential between the Estimize and Wall Street numbers compared to previous quarters.
Over the past four months the Wall Street consensus trend for EPS has increased from $0.02 to $0.06 while Wall Street revenue expectations have increased from $1.415B to $1.538B. The Estimize EPS and revenue consensus have decreased this quarter with EPS going from 9c to 8c and revenue has fallen from $1.588B to $1.569B.
Over the previous 6 quarters, AMD has beaten the Wall Street consensus for EPS every time and beaten the Wall Street consensus for revenue 3 times. Over the same time period AMD has beaten the Estimize EPS consensus 4 times and the Estimize Revenue 3 times.
The distribution of estimates published by analysts on Estimize range from $0.05 to $0.10 EPS and $1.525B to $1.610B revenues. We’re seeing a smaller distribution of estimates this quarter for AMD than normal. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A narrower distribution signaling the potential for less volatility post earnings, a wider vice versa.
The analyst with the highest estimate confidence rating this quarter is jshoe who projects $0.06 EPS and $1.525B in revenue. Estimate confidence ratings are calculated through algorithms developed by our deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy.
AMD is set on a track of innovation right now, blowing past its competition. However, bearish analysts who believe that AMD won’t be pulling a strong quarter are mainly focused on the fact that computer graphics card sales haven’t been as high as in previous years. Nevertheless, it is extremely important to recognize the role that console sales have upon AMD’s bottom line. By recognizing the fact that though AMD’s sales of chips have been lower as a result of a PC slump, AMD’s technology remains both better and more affordable than its competition.
Disclosure: No positions