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Will Cirrus Crush This Quarter?

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This week, you saw Apple (Nasdaq: AAPL  ) totally crushing Street expectations in a blowout earnings report. Shares jumped 6% on the news. But well-known component makers Qualcomm (Nasdaq: QCOM  ) and Cirrus Logic (Nasdaq: CRUS  ) have not followed suit.

Cirrus, which makes audio processors for just about every gadget in Apple's portfolio, reports its own third-quarter results after market close tonight. Will these numbers mirror Apple's?

First of all, Cirrus investors may actually have jumped the gun on this report. Year to date, shares have already climbed more than 40%. Qualcomm and Apple look like laggards through this lens with gains of just 8% and 10%, respectively. This stock is clearly priced for one heck of a quarter already.

Analysts have raised their earnings targets five times in the last month, according to Thomson via Yahoo! Finance. That's very interesting, since only four firms offer earnings estimates in the first place. Someone must have double-dipped into the upward revisions bucket.

All told, the Street now expects earnings of $0.43 per share, up from $0.33 a month ago. None of the upward revisions happened this week, so there's still room for a surprise to the upside given Apple's strong results. Sales are supposed to land at $122 million, again subject to surprises. That's in line with updated management guidance.

Apple's orders made up 59% of Cirrus' revenues in the second quarter, and that ratio is only going up. The analyst consensus points to sales growth of about 27% year over year, but Apple more than doubled its volumes of both iPhones and iPads over the same period. Are the analysts -- and Cirrus management -- still lowballing us?

I expect Cirrus to crush even the boosted earnings estimates tonight. The refreshed guidance makes a revenue surprise much less likely. Qualcomm will do the same next week, albeit to a lesser degree because that company has a more diverse customer Rolodex. If you're looking for a stock in the mobile space that Foolish analysts love, check out this short list of the three best smartphone plays from the chip industry -- including a detailed analysis of Cirrus. It's free today but might be gone tomorrow, so get your copy right away.

Fool contributor Anders Bylund holds no position in any of the companies mentioned. The Motley Fool owns shares of Apple, Cirrus Logic, and Qualcomm. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.

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Related Tickers

10/27/2016 4:00 PM
CRUS $51.79 Down -0.86 -1.63%
Cirrus Logic CAPS Rating: ****
AAPL $114.48 Down -1.11 -0.96%
Apple CAPS Rating: ****
QCOM $70.09 Up +1.89 +2.77%
Qualcomm CAPS Rating: ****