Advanced Micro Devices, Inc. AMD is set to report first-quarter 2015 results on Apr 16. Last quarter, the company posted a 100.0% negative earnings surprise. Let’s see how things are shaping up for this announcement.

Factors to Consider

Advanced Micro’s fourth-quarter breakeven results missed the Zacks Consensus Estimate of earnings of 1 cent due to weak consumer PC market. Also, revenues were down sequentially due to weak sales of graphic cards and ongoing weakness in the company’s PC business.

A more conducive market, increased game console wins, solid position in graphics and good execution will likely lower the company’s dependence on the PC market. The company is diversifying its business into new markets and expanding its revenue base which should boost results in the to-be-reported quarter. However, ongoing weakness in the company’s PC business could impact first-quarter results.

Margins of 29.1% were down sequentially as well as year over year due to unfavorable product mix.

Management expects first-quarter revenues to decrease 15% sequentially (+/- 3%), due to a weak consumer PC environment. Non-GAAP gross margin is expected to be 34%. Operating expenses are estimated to be approximately $350.0 million and interest expense nearly $46 million.

Earnings Whispers

Our proven model does not conclusively show that Advanced Micro will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 6 cents. Hence, the difference is 0.00%.

Zacks Rank: Advanced Micro has a Zacks Rank #3 (Hold), which, when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

You could consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank:

Allison Transmission Holdings, Inc. ALSN, with an Earnings ESP of +9.23% and a Zacks Rank #1 (Strong Buy).

Broadcom Corp. BRCM, with an Earnings ESP of +5.00% and a Zacks Rank #1.

SVB Financial Group SIVB, with an Earnings ESP of +2.99% and a Zacks Rank #1.

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