SanDisk Corp. (SNDK) will host a conference call Wednesday, Oct. 16, 2013 at 2 p.m., Pacific to discuss its third quarter 2013 financial results.
Wall Street anticipates that SNDK will earn $1.32 for the quarter. iStock expects the NASDAQ 100 member to beat Wall Street's consensus number. The iEstimate is $1.46, a fourteen cent upside surprise.
Sandisk Corporation designs, develops, manufactures, and markets flash storage card products that are used in various consumer electronics products. The company offers removable cards under the SanDisk Ultra, SanDisk Extreme, CompactFlash, and SanDisk Extreme PRO brands; embedded products under the iNAND brand; and digital media players under the Sansa brand.
In the last four quarters, the flash memory maker has topped Wall Street's consensus every time by an average of 30%, which would put EPS much higher than our iEstimate at $1.72. Last quarter's surprise of 30.10% (on the average coincidentally) dove shares from $59 and change to more than $63 following the profit news.
The bottom line is always celebrated, but it is management's forward guidance that propels or repels the stock price.
According to onstrategies.com, "Given current price trends, some analysts expect Flash to reach parity with disk in the next 12 – 18 months (or maybe sooner), there will be less reason for your next transaction system to be disk-based. In fact there is good reason to be a bit skeptical on how soon supply of SSD Flash will ramp up adequately for the transaction system market; but SSD Flash will gradually make its way to prime time."
Put into English, demand should continue to improve for companies like SanDisk Corp. (SNDK). Unlike hard drives, internal Solid State Drive prices in USD have remained relatively steady since March; whereas hard drives prices have steadily declined according to pcpartpicker.com.
The combination of relatively steady prices and the upward slope of demand should work favorably for SanDisk and peers, which hopefully leads to top-end guidance from management Wednesday afternoon.
SNDK's financial statements are also working in favor of the NASDAQ stock and its shareholders. Year-over-year (YoY) revenues grew 42% in Q2 while total expenses rose at a much, much slower pace of 8.8%.
That usually means a fat jump in margins, which is what we see as YoY net margin spiked to 17.73% from 1.26%. That's probably why investors reacted so positively following last quarter's quarterly checkup.
We find no problems one the balance sheet as inventory actually fell during 43% revenue growth. Meanwhile, accounts receivable barely budged higher. This pairing is usually a sign of demand outstripping supply; a dynamic that usually benefits shareholders and companies, again.
Overall: The iEstimate and market trends suggest that SanDisk Corp. (SNDK) should top the analysts' consensus and conditions are ripe for upbeat management guidance
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