Diodes Incorporated (DIOD - Snapshot Report) is scheduled to report second-quarter 2016 results on Aug 9, 2016. Last quarter, the company posted a positive earnings surprise of 50%. Let's see how things are shaping up for this announcement.

Factors to Consider

Diodes reported mixed results in the first quarter of 2016, where in the bottom line surpassed the Zacks Consensus Estimates but the top line missed the same. However, the year-over-year comparisons on both counts were favorable.

The BCD Semiconductor acquisition continues to benefit Diodes by expanding its footprint in the broader analog market and extending its product offerings. We believe the company’s product launches will boost revenues, going forward.

However, competition from the likes of Fairchild Semiconductor International Inc. (FCS - Snapshot Report) and Vishay Intertechnology Inc. remains a concern for the company.

Earnings Whispers?

Our proven model does not conclusively show that Diodes will beat earnings 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: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 21 cents per share. Hence, the difference is 0.00%.

Zacks Rank: Diodes’ Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a 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

Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Digital Turbine, Inc. (APPS - Snapshot Report) , with an Earnings ESP of +12.50% and a Zacks Rank #3

The Gap, Inc. (GPS - Analyst Report) with an Earnings ESP of +2.13% and a Zacks Rank #3

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