Chip designer Allegro MicroSystems (NASDAQ:ALGM) will be reporting earnings tomorrow before market open. Here’s what investors should know.

Allegro MicroSystems beat analysts’ revenue expectations by 1.2% last quarter, reporting revenues of $166.9 million, down 40% year on year. It was a slower quarter for the company, with a decline in its operating margin.

Is Allegro MicroSystems a buy or sell going into earnings? Read our full analysis here, it’s free.

This quarter, analysts are expecting Allegro MicroSystems’s revenue to decline 31.9% year on year to $187.6 million, a reversal from the 15.9% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.06 per share.

The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Allegro MicroSystems has only missed Wall Street’s revenue estimates once over the last two years, exceeding top-line expectations by 1.7% on average.

Looking at Allegro MicroSystems’s peers in the processors and graphics chips segment, some have already reported their Q3 results, giving us a hint as to what we can expect. AMD delivered year-on-year revenue growth of 17.6%, beating analysts’ expectations by 1.6%, and Qorvo reported a revenue decline of 5.2%, topping estimates by 1.8%.

Read our full analysis of AMD’s results here and Qorvo’s results here.

There has been positive sentiment among investors in the processors and graphics chips segment, with share prices up 2.7% on average over the last month. Allegro MicroSystems is up 8.3% during the same time and is heading into earnings with an average analyst price target of $32.41 (compared to the current share price of $23.87).

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