DTS Inc (DTSI) to Report Q4 Earnings: What's in the Cards?

DTS Inc. DTSI is set to release fourth-quarter 2015 earnings on Mar 2, after the closing bell. Last quarter, the company had delivered a negative earnings surprise of 29.63%. However, the company has delivered an average positive earnings surprise of 7.22% in the trailing four quarters. Let’s see how things are shaping up for this announcement.

Factors to Consider

We believe DTS will continue to gain market share backed by a strong product portfolio, increasing online availability and accelerated expansion of DTS technology into new markets, such as smartphones, portable devices, digital media players and network-connected TV space. Moreover, the company continues to invest in the network connected business, which will likely help it gain significant market traction going ahead.

Recently, DTS completed the acquisition of iBiquity Digital Corporation, thus expanding the platform for providing high quality audio solutions and experiences across the entertainment spectrum. This deal should be accretive to the company’s financials and drive both strategic and financial synergy over the long term.

However, the ongoing volatile macroeconomic environment, weakness in the consumer electronics market and sluggish consumer spending pose headwinds in the near term. Moreover, higher integration costs are likely to hurt profitability in the fourth quarter. For 2015, DTS expects revenues in the range of $130 to $135 million and non-GAAP earnings per share in the range of $1.00 to $1.10.

Earnings Whispers

Our proven model does not conclusively show that DTS is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below

Zacks ESP: DTS has an earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 4 cents per share.

Zacks Rank: Though DTS has a Zacks Rank #3 which increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

Stocks to Consider

Here is a few stocks that you may consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

NeoPhotonics Corporation NPTN, which has an Earnings ESP of +12.50% and a Zacks Rank #1

Superior Industries International, Inc. SUP, which has an Earnings ESP of +11.11% and a Zacks Rank #1

Casey's General Stores, Inc. CASY, which has an Earnings ESP of +10.11% and a Zacks Rank #2.

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NEOPHOTONICS CP (NPTN): Free Stock Analysis Report
 
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SUPERIOR INDS (SUP): Free Stock Analysis Report
 
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