Zacks_Analysts' Blog : Cohu Surpasses Estimates - Analyst Blog

Cohu Inc. (COHU) reported fiscal fourth quarter 2010 diluted earnings of 48 cents per share (according to Non-GAAP figure provided by the company) beating Zacks Consensus Estimate of 40 cents per share and also increased 336.4% from year ago quarter of 11 cents per share. This also compares favorably with the prior quarter earnings of 41 cents per share.

On GAAP basis the diluted earnings came at 39 cents per share that bettered the previous quarter earnings of 32 cents.

Quarter in Detail

Revenue for the reported quarter was $96.9 million, surpassing Zacks Consensus Estimate of $95.0 million. On a sequential basis the revenue was up 12.5% and increased 85.6% from the previous year quarter.

Revenues from the sale of semiconductor equipment registered 79.0% of the revenues in reported quarter. Microwave communications equipment and video cameras and related equipment contributed 15.9% and 5.1%, respectively.

However, orders for the quarter decreased sequentially from $90.0 million to $75.8 million. Orders for semiconductor equipment also decreased from $74.0 million to $67.1 million sequentially.

Gross profit increased 8.0% sequentially and 97.0% from the year-ago quarter to $32.5 million. Gross margin for the quarter was 33.5%.

Operating profit increased 19.3% sequentially and 1850.0% from the previous year quarter to $10.5 million. Operating margin was 10.8%.

The company approved a quarterly cash dividend of 6 cents per share payable on April 22, 2011 to shareholders of record on March 8, 2011.

Quarter Ahead

For the first quarter 2011 management expects sales of Cohu to be in between $85.0 million and $90.0 million.

Conclusion

Analyst estimates remained unchanged in the run up to the earnings release. The average estimate was 40 cents when the company reported earnings.

We note that Cohu Inc. has consistently exceeded estimates over the past year or so. The average surprise in the preceding 4 quarters is a positive 121.96%, and another positive surprise was therefore expected.

Cohu faces stiff competition from Checkpoint Systems Inc. (CKP) and Advantest Corporation (ATE).

We currently have Zacks #3 Rank for Cohu Inc. on a short-term basis. We have a Neutral recommendation on a long-term basis.