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Infineon (IFNNY) Stock Gains Despite Q1 Earnings Miss
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Shares Infineon Technologies AG (IFNNY - Free Report) increased 1.4% to close at $19.15 following better-than-expected first-quarter fiscal 2017 results. Adjusted earnings of 18 cents per share missed the Zacks Consensus Estimate by a penny and remained flat on a year-over-year basis.
Moreover, revenues increased 5.7% year over year to $1.73 billion in the quarter. The top-line growth came on the back of strong sales in two of the company’s four business segments, namely, Automotive and Industrial Power Control.
We note than Infineon has underperformed the Zacks Electronics Semiconductors industry in the last one year. While the stock gained 62.1%, the industry returned 86.9% in the same period. The strong revenue growth and positive guidance will help the stock rebound in the rest of fiscal 2017.
Quarter Details
Automotive (ATV) revenues increased 14.8% year over year to $741.4 million. Continued high demand for driver assistance systems and products deployed in hybrid and electric vehicles drove the results.
Industrial Power Control (IPC) revenues increased 6% year over year to $277.6 million.
Power Management & Multi-market (PMM) revenues declined 2.2% on a year-over-year basis to $522.6 million.
Moreover, Chip Card & Security (CCS) revenues declined 0.6% from the year-ago quarter to $183 million.
Adjusted gross margin contracted 10 basis points (bps) from the year-ago quarter to 37.6% in the reported quarter.
Research & Development (R&D) and Selling, General & Administrative (SG&A) expenses as percentage of revenues decreased 60 bps and 90 bps, respectively.
As a result, operating margin expanded 50 bps on a year-over-year basis to 11.2%.
Infineon Technologies AG Price, Consensus and EPS Surprise
Segment-wise, ATV, Industrial Power Control, Power Management & Multi-market and Chip Card & Security operating margins contracted 90 bps, 90 bps, 60 bps and 330 bps, respectively.
Guidance
For second-quarter 2017, Infineon expects revenues to increase 5% (+/- 2%). At the mid-point of the forecast revenue range, the segment operating margin is expected to be 15%.
For fiscal 2017, Infineon continues to forecast revenue growth around 6% (+/-2%), and a segment operating margin of 16% at the mid-point of revenue guidance.
The ATV segment is expected to grow at a substantially faster rate than the consolidated company average. Growth in the IPC segment is forecast to be roughly in line with or slightly higher than the consolidated company average. The PMM and CCS segments are both expected to report growth rates below the consolidated company average.
Long-term earnings growth rate for Applied Optoelectronics, Broadcom and NVEC is currently pegged at 18.33%, 13.59% and 25%, respectively.
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Infineon (IFNNY) Stock Gains Despite Q1 Earnings Miss
Shares Infineon Technologies AG (IFNNY - Free Report) increased 1.4% to close at $19.15 following better-than-expected first-quarter fiscal 2017 results. Adjusted earnings of 18 cents per share missed the Zacks Consensus Estimate by a penny and remained flat on a year-over-year basis.
Moreover, revenues increased 5.7% year over year to $1.73 billion in the quarter. The top-line growth came on the back of strong sales in two of the company’s four business segments, namely, Automotive and Industrial Power Control.
We note than Infineon has underperformed the Zacks Electronics Semiconductors industry in the last one year. While the stock gained 62.1%, the industry returned 86.9% in the same period. The strong revenue growth and positive guidance will help the stock rebound in the rest of fiscal 2017.
Quarter Details
Automotive (ATV) revenues increased 14.8% year over year to $741.4 million. Continued high demand for driver assistance systems and products deployed in hybrid and electric vehicles drove the results.
Industrial Power Control (IPC) revenues increased 6% year over year to $277.6 million.
Power Management & Multi-market (PMM) revenues declined 2.2% on a year-over-year basis to $522.6 million.
Moreover, Chip Card & Security (CCS) revenues declined 0.6% from the year-ago quarter to $183 million.
Adjusted gross margin contracted 10 basis points (bps) from the year-ago quarter to 37.6% in the reported quarter.
Research & Development (R&D) and Selling, General & Administrative (SG&A) expenses as percentage of revenues decreased 60 bps and 90 bps, respectively.
As a result, operating margin expanded 50 bps on a year-over-year basis to 11.2%.
Infineon Technologies AG Price, Consensus and EPS Surprise
Infineon Technologies AG Price, Consensus and EPS Surprise | Infineon Technologies AG Quote
Segment-wise, ATV, Industrial Power Control, Power Management & Multi-market and Chip Card & Security operating margins contracted 90 bps, 90 bps, 60 bps and 330 bps, respectively.
Guidance
For second-quarter 2017, Infineon expects revenues to increase 5% (+/- 2%). At the mid-point of the forecast revenue range, the segment operating margin is expected to be 15%.
For fiscal 2017, Infineon continues to forecast revenue growth around 6% (+/-2%), and a segment operating margin of 16% at the mid-point of revenue guidance.
The ATV segment is expected to grow at a substantially faster rate than the consolidated company average. Growth in the IPC segment is forecast to be roughly in line with or slightly higher than the consolidated company average. The PMM and CCS segments are both expected to report growth rates below the consolidated company average.
Zacks Rank & Key Picks
Infineon currently carries a Zacks Rank #2 (Buy). Better-ranked stocks in the broader sector include Applied Optoelectronics (AAOI - Free Report) , Broadcom (AVGO - Free Report) and NVE Corporation (NVEC - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here..
Long-term earnings growth rate for Applied Optoelectronics, Broadcom and NVEC is currently pegged at 18.33%, 13.59% and 25%, respectively.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>