A month has gone by since the last earnings report for Xilinx, Inc. . Shares have added about 2.7% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Xilinx Q3 Earnings, Revenues Top Estimates, Up Y/Y
Xilinx reported better-than-expected results in the third-quarter of fiscal 2017. The top and the bottom line also witnessed impressive year-over-year improvement.
The company’s earnings (including stock-based compensation but excluding all other one-time items) of $0.52 per share came ahead of the Zacks Consensus Estimate of $0.49. The figure also increased 6.1% from the year-ago quarter on the back of strong top-line growth and effective cost management.
Revenues
Xilinx reported fiscal third-quarter revenues of approximately $585.7 million, up 3.4% year over year and above the Zacks Consensus Estimate of $579 million. The quarter marked the fifth consecutive quarter of revenue growth. On a sequential basis, the company’s revenues grew roughly 1.1%.
The robust revenue growth was mainly driven by strong sales of the company’s 16nm Ultrascale+, 20nm Ultrascale, and 28nm Zynq products. Moshe Gavrielov, Xilinx President and Chief Executive Officer said that “The growth from these products was driven by a broad base of markets such as data center, automotive, test & measurement, wired and wireless communications and space”.
Furthermore, the company’s wireless business rebounded, mainly driven by 4G business in China and India as well as pre-5G deployment.
On the basis of End Market, sales at the Communications & Data Center division increased 4% from the prior-year quarter and 7% sequentially. Sales at the Industrial, Aerospace & Defense division increased 5% on a year-over-year basis and 1% sequentially. However, revenues at Broadcast, Consumer & Automotive decreased 2% year over year and 13% sequentially.
Product-wise, revenues from Advanced products increased a whopping 30% year over year and 2% sequentially, driven mainly by strong sales of 28-nm, 20-nm and 16-nm products. On the other hand, as expected, revenues from core products declined 12% from the year-ago quarter. However, it remained flat sequentially.
Geographically, on a year-over-year basis, revenues from Europe and Asia-Pacific increased 13% and 9%, respectively. On the other hand, revenues from Japan and North America declined 14% and 3%, respectively, on a year-over-year basis.
Margins
Xilinx reported a 70 basis point (bps) contraction in adjusted gross margin on a year-over-year basis to 69.6%. Also, reported gross margin was above the company’s guidance of 69%.
Adjusted operating expenses increased 7.6% to $243 million as the company continues to strategically increase its investments in R&D. Moreover, as a percentage of revenues, operating expenses amounted to 41.5%, reflecting a 160 bps year-over-year increase. On a reported basis, the company’s operating expenses were $244.5 million, which was almost in-line with its own expectations of $245 million.
Adjusted operating income of $164.4 million remained almost flat when compared with the year-ago quarter. However, adjusted operating margin contracted 100 bps as the benefit from improved gross margin was more than offset by higher operating expenses as a percentage of revenues.
Adjusted net income for the quarter came in at $143.3 million compared with $134.2 million.
Balance Sheet, Cash Flow & Shareholders’ Return
Xilinx exited the quarter with cash and cash equivalents, and short-term investments of approximately $3.25 billion, compared with $3.49 billion in the previous quarter. The company has total long-term debt (long-term debt plus current portion) of about $994.8 million.
During the quarter, Xilinx generated cash of $105.6 million from operations and incurred $19.9 million as capital expenditure. Moreover, the company paid $83.3 million as cash dividends and repurchased shares worth $213.1 million during the quarter.
In the first three quarters of fiscal 2017, Xilinx generated cash of $627.8 million from operations and incurred $51.8 million as capital expenditure. Moreover, the company paid $250.7 million as cash dividends and repurchased shares worth $414 million during the first nine months of the current fiscal.
Concurrent with fiscal third-quarter results, Xilinx announced that its board of directors has approved a quarterly cash dividend of $0.33 per share. The raised dividend will be paid on Feb 23 to shareholders of record date as on Feb 8.
Guidance
For the last quarter of fiscal 2017, the company expects revenues in a range $590 million to $620 million (mid-point $605 million). The mid-point of the company’s guidance for the fourth quarter is below the Zacks Consensus Estimate of $610.28 million.
Gross margin is anticipated to be in between 68% and 70%. Operating expenses are likely to be around $244 million, which includes approximately $1 million of amortization of acquisition-related intangibles. Effective tax rate stands at approximately 14%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Xilinx's stock has an average Growth Score of 'C', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is suitable for momentum and growth investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.
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Why Is Xilinx (XLNX) Up 2.7% Since the Last Earnings Report?
A month has gone by since the last earnings report for Xilinx, Inc. . Shares have added about 2.7% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Xilinx Q3 Earnings, Revenues Top Estimates, Up Y/Y
Xilinx reported better-than-expected results in the third-quarter of fiscal 2017. The top and the bottom line also witnessed impressive year-over-year improvement.
The company’s earnings (including stock-based compensation but excluding all other one-time items) of $0.52 per share came ahead of the Zacks Consensus Estimate of $0.49. The figure also increased 6.1% from the year-ago quarter on the back of strong top-line growth and effective cost management.
Revenues
Xilinx reported fiscal third-quarter revenues of approximately $585.7 million, up 3.4% year over year and above the Zacks Consensus Estimate of $579 million. The quarter marked the fifth consecutive quarter of revenue growth. On a sequential basis, the company’s revenues grew roughly 1.1%.
The robust revenue growth was mainly driven by strong sales of the company’s 16nm Ultrascale+, 20nm Ultrascale, and 28nm Zynq products. Moshe Gavrielov, Xilinx President and Chief Executive Officer said that “The growth from these products was driven by a broad base of markets such as data center, automotive, test & measurement, wired and wireless communications and space”.
Furthermore, the company’s wireless business rebounded, mainly driven by 4G business in China and India as well as pre-5G deployment.
On the basis of End Market, sales at the Communications & Data Center division increased 4% from the prior-year quarter and 7% sequentially. Sales at the Industrial, Aerospace & Defense division increased 5% on a year-over-year basis and 1% sequentially. However, revenues at Broadcast, Consumer & Automotive decreased 2% year over year and 13% sequentially.
Product-wise, revenues from Advanced products increased a whopping 30% year over year and 2% sequentially, driven mainly by strong sales of 28-nm, 20-nm and 16-nm products. On the other hand, as expected, revenues from core products declined 12% from the year-ago quarter. However, it remained flat sequentially.
Geographically, on a year-over-year basis, revenues from Europe and Asia-Pacific increased 13% and 9%, respectively. On the other hand, revenues from Japan and North America declined 14% and 3%, respectively, on a year-over-year basis.
Margins
Xilinx reported a 70 basis point (bps) contraction in adjusted gross margin on a year-over-year basis to 69.6%. Also, reported gross margin was above the company’s guidance of 69%.
Adjusted operating expenses increased 7.6% to $243 million as the company continues to strategically increase its investments in R&D. Moreover, as a percentage of revenues, operating expenses amounted to 41.5%, reflecting a 160 bps year-over-year increase. On a reported basis, the company’s operating expenses were $244.5 million, which was almost in-line with its own expectations of $245 million.
Adjusted operating income of $164.4 million remained almost flat when compared with the year-ago quarter. However, adjusted operating margin contracted 100 bps as the benefit from improved gross margin was more than offset by higher operating expenses as a percentage of revenues.
Adjusted net income for the quarter came in at $143.3 million compared with $134.2 million.
Balance Sheet, Cash Flow & Shareholders’ Return
Xilinx exited the quarter with cash and cash equivalents, and short-term investments of approximately $3.25 billion, compared with $3.49 billion in the previous quarter. The company has total long-term debt (long-term debt plus current portion) of about $994.8 million.
During the quarter, Xilinx generated cash of $105.6 million from operations and incurred $19.9 million as capital expenditure. Moreover, the company paid $83.3 million as cash dividends and repurchased shares worth $213.1 million during the quarter.
In the first three quarters of fiscal 2017, Xilinx generated cash of $627.8 million from operations and incurred $51.8 million as capital expenditure. Moreover, the company paid $250.7 million as cash dividends and repurchased shares worth $414 million during the first nine months of the current fiscal.
Concurrent with fiscal third-quarter results, Xilinx announced that its board of directors has approved a quarterly cash dividend of $0.33 per share. The raised dividend will be paid on Feb 23 to shareholders of record date as on Feb 8.
Guidance
For the last quarter of fiscal 2017, the company expects revenues in a range $590 million to $620 million (mid-point $605 million). The mid-point of the company’s guidance for the fourth quarter is below the Zacks Consensus Estimate of $610.28 million.
Gross margin is anticipated to be in between 68% and 70%. Operating expenses are likely to be around $244 million, which includes approximately $1 million of amortization of acquisition-related intangibles. Effective tax rate stands at approximately 14%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Xilinx, Inc. Price and Consensus
Xilinx, Inc. Price and Consensus | Xilinx, Inc. Quote
VGM Scores
At this time, Xilinx's stock has an average Growth Score of 'C', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is suitable for momentum and growth investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.