Amkor Technology (AMKR) is a Zacks Rank #5 (Strong Sell) after the company missed the Zacks Consensus Estimate when the last reported on October 28. The stock was hit hard after the miss thanks to some soft guidance.  The company is in the semiconductor ecosystem providing packaging and test services. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.

Description                       

Amkor Technology, Inc. engages in the provision of outsourced semiconductor packaging and test services. Its services include design, package characterization, test, and wafer bumping services. The company was founded in 1968 and is headquartered in Tempe, AZ.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of Amkor Technology (AMKR), I see three beats and one miss of the Zacks Consensus Estimate over the last year. The most recent quarter was the miss with the company posting $0.49 when the consensus was calling for $0.50.  This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.

The company guided EPS for next quarter to a range of $0.28 - $0.44 when the consensus was calling for EPS of $0.55.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For AMKR I see annual estimates moving lower of late.

The current fiscal year consensus number moved lower from $1.54 to $1.42 over the last 60 days. 

The next year has moved from $2.29 to $1.97 over the last 60 days.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a lot of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).

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