Thursday, July 25: the peak of second-quarter earnings season. These four electronics-related companies will report on that day, some with share prices that have skyrocketed this year. Will the positive trends persist? Let’s take a look at each and see what we find.
A diversifying electronics manufacturing services company
What separates Benchmark Electronics, Inc. (NYSE:BHE) from its electronics manufacturing services (EMS) provider peers is a more aggressive approach to attaining new production programs. Particularly, it is typically looking to broaden its customer base beyond the computing sector that it had relied heavily on in the past. It is focusing on the Industrial Control, Medical, Telecom, and other categories for expansion.
The strategy is helping to boost gross margins, thanks to a better mix and the ramping of new contracts. Indeed, the volume level increases on new contracts contribute to better profitability.
This being known, Benchmark Electronics, Inc. (NYSE:BHE) is likely to endure a period of bottom-line declines, at least for a couple of quarters, as it launches high-volume product lines with several customers across numerous industries served. Overall, Benchmark Electronics, Inc. (NYSE:BHE) is apt to report second-quarter earnings of $0.28 per share, versus $0.32 in the prior year, probably due to a temporary erosion of margins. Benchmark Electronics, Inc. (NYSE:BHE) shares are trading at a P/E of around 15.9.
A microcontroller producer that could bounce back
Freescale Semiconductor Ltd (NYSE:FSL) competes with the likes of Microchip Technology and Atmel Corp. in the market for microcontrollers, which are basically programmable semiconductors that are incorporated into an increasing number of everyday products. The company has been struggling, operating in the red for most of the last three years.
Nevertheless, the company could well be on the cusp of a return to solid profitability. The microcontroller market has rebounded, which is partly a reflection of an improved automotive sector, as autos represent a major clientele group. Plus, digital networking (mainly LTE) related demand has risen. Freescale Semiconductor Ltd (NYSE:FSL) will likely post June-quarter per share earnings of around $0.03, with the gross margin still weighed down by soft plant utilization.
Accordingly, as demand and capacity absorption continue to turn upward, profits ought to climb, too. The shares, trading at a 10.6 P/E, based on fiscal 2013 and 2014 share earnings of $0.50 and $1.40 (years end in March of the following year), are worth a look for more venturesome investors.
A thermal vision product maker expanding its horizon