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FormFactor (FORM) Up 2.9% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for FormFactor (FORM - Free Report) . Shares have added about 2.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is FormFactor due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
FormFactor reported first-quarter 2022 adjusted earnings of 49 cents per share, which surpassed the Zacks Consensus Estimate by 25.6%. Also, the bottom line increased 11.4% on a sequential basis and 28.9% year over year.
Revenues increased 5.7% year over year to $197.2 million. Further, the figure surpassed the Zacks Consensus Estimate by 1.5%.
The year-over-year growth in the top line was driven by strong demand for Foundry & Logic and Systems.
Yet, revenues decreased 3.8% from the previous quarter owing to weak demand for DRAM and Flash products.
Segments in Detail
Probe card: Revenues from this segment were $159.98 million for the first quarter, up 0.7% year over year but down 3.6% sequentially.
Foundry & Logic (accounting for 57.9% of revenues) revenues were $114.1 million, up 0.6% year over year and 0.1% sequentially.
Revenues for DRAM products (17.5% of revenues) were $34.5 million, reflecting an increase of 1.8% year over year but a decrease of 14.4% from the previous quarter.
Flash revenues (5.8% of revenues) were $11.4 million, down 1.72% from the year-ago period and fourth-quarter 2021.
Systems: Revenues from this segment were $37.2 million (18.9% of revenues), up 34.3% year over year but down 4.9% sequentially.
Regional Details
Revenues generated from Taiwan (accounting for 27% of revenues), South Korea (14%), Malaysia (11%) and Japan (5%) were $53.1 million, $27.5 million, $25.6 million, $22.2 million and $9.4 million, respectively. The respective revenues increased 16.4%, 44%, 158.1% and 1.1% year over year.
Then again, revenues generated from China (19%), the United States (13%), Singapore (6%), Europe (4%) and the Rest of World (1%) were $38.4 million, $25.6 million, $10.9 million, $8.4 million and $1.7 million, respectively. The respective revenues were down 9.9%, 13.2%, 45.2%, 16% and 15% from the year-ago period.
Operating Results
On a non-GAAP basis, gross margin expanded 4 basis points (bps) year over year to 49%. Also, the Probe card segment’s gross margin was 48.3%, expanding 4 bps year over year. The Systems segment’s gross margin was 49%, contracting 320 bps year over year.
Non-GAAP operating expenses increased 11.7% year over year to $51.9 million. As a percentage of total first-quarter revenues, the metric expanded 142 bps year over year to 26.3%.
Non-GAAP operating income was $44.7 million, up 19% year over year. As a percentage of revenues, it expanded 255 bps year over year to 22.7%.
Balance Sheet & Cash Flow
As of Mar 26, 2022, cash & cash equivalents and marketable securities were $296.4 million compared with $276.1 million on Dec 25, 2021.
Further, cash generated from operating activities was $44.2 million for the reported quarter, up from $38.9 million in the previous quarter.
Capital expenditure was $15.6 million, up from $15.1 million in the fourth quarter of 2021.
Further, free cash flow was $28.7 million for the reported quarter, up from $23.9 million in the previous quarter.
Guidance
FormFactor expects second-quarter 2022 revenues of $203 million (+/- $6 million).
Further, management expects non-GAAP gross margin of 47% (+/- 1.5%).
On a non-GAAP basis, it projects earnings of 43 cents (+/- 4 cents) per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, FormFactor has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, FormFactor has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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FormFactor (FORM) Up 2.9% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for FormFactor (FORM - Free Report) . Shares have added about 2.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is FormFactor due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
FormFactor Q1 Earnings Beat, Revenues Increase Y/Y
FormFactor reported first-quarter 2022 adjusted earnings of 49 cents per share, which surpassed the Zacks Consensus Estimate by 25.6%. Also, the bottom line increased 11.4% on a sequential basis and 28.9% year over year.
Revenues increased 5.7% year over year to $197.2 million. Further, the figure surpassed the Zacks Consensus Estimate by 1.5%.
The year-over-year growth in the top line was driven by strong demand for Foundry & Logic and Systems.
Yet, revenues decreased 3.8% from the previous quarter owing to weak demand for DRAM and Flash products.
Segments in Detail
Probe card: Revenues from this segment were $159.98 million for the first quarter, up 0.7% year over year but down 3.6% sequentially.
Foundry & Logic (accounting for 57.9% of revenues) revenues were $114.1 million, up 0.6% year over year and 0.1% sequentially.
Revenues for DRAM products (17.5% of revenues) were $34.5 million, reflecting an increase of 1.8% year over year but a decrease of 14.4% from the previous quarter.
Flash revenues (5.8% of revenues) were $11.4 million, down 1.72% from the year-ago period and fourth-quarter 2021.
Systems: Revenues from this segment were $37.2 million (18.9% of revenues), up 34.3% year over year but down 4.9% sequentially.
Regional Details
Revenues generated from Taiwan (accounting for 27% of revenues), South Korea (14%), Malaysia (11%) and Japan (5%) were $53.1 million, $27.5 million, $25.6 million, $22.2 million and $9.4 million, respectively. The respective revenues increased 16.4%, 44%, 158.1% and 1.1% year over year.
Then again, revenues generated from China (19%), the United States (13%), Singapore (6%), Europe (4%) and the Rest of World (1%) were $38.4 million, $25.6 million, $10.9 million, $8.4 million and $1.7 million, respectively. The respective revenues were down 9.9%, 13.2%, 45.2%, 16% and 15% from the year-ago period.
Operating Results
On a non-GAAP basis, gross margin expanded 4 basis points (bps) year over year to 49%. Also, the Probe card segment’s gross margin was 48.3%, expanding 4 bps year over year. The Systems segment’s gross margin was 49%, contracting 320 bps year over year.
Non-GAAP operating expenses increased 11.7% year over year to $51.9 million. As a percentage of total first-quarter revenues, the metric expanded 142 bps year over year to 26.3%.
Non-GAAP operating income was $44.7 million, up 19% year over year. As a percentage of revenues, it expanded 255 bps year over year to 22.7%.
Balance Sheet & Cash Flow
As of Mar 26, 2022, cash & cash equivalents and marketable securities were $296.4 million compared with $276.1 million on Dec 25, 2021.
Further, cash generated from operating activities was $44.2 million for the reported quarter, up from $38.9 million in the previous quarter.
Capital expenditure was $15.6 million, up from $15.1 million in the fourth quarter of 2021.
Further, free cash flow was $28.7 million for the reported quarter, up from $23.9 million in the previous quarter.
Guidance
FormFactor expects second-quarter 2022 revenues of $203 million (+/- $6 million).
Further, management expects non-GAAP gross margin of 47% (+/- 1.5%).
On a non-GAAP basis, it projects earnings of 43 cents (+/- 4 cents) per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, FormFactor has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, FormFactor has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.