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Infineon Technologies AG (IFNNY - Free Report) reported second-quarter adjusted earnings of 21 cents per share, which missed the Zacks Consensus Estimate by 4 cents but increased almost 9% on a year-over-year basis.
Moreover, revenues increased 9.7% year over year to $1.89 billion in the quarter, slightly better than the Zacks Consensus Estimate of $1.88 billion. The top-line growth came on the back of strong sales in three of the company’s four business segments. Power now represents almost 60% of revenues in the reported quarter.
The quarterly results demonstrated Infineon’s strong growth prospects in the automotive market. The company’s products are currently used by eight of the top-10 electric vehicle makers including Tesla (TSLA - Free Report) , BMW and Renault. Moreover, the company’s focus on developing energy-efficient solutions will be a key catalyst going ahead.
Automatic Data Processing, Inc. Price, Consensus and EPS Surprise
We note that Infineon has outperformed the Zacks Electronics Semiconductors industry on a year-to-date basis. While the stock returned 19.6%, the industry gained 17%.
Quarter Details
Automotive (ATV) revenues increased 16.7% year over year to $836.2 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 10.6% year over year to $312.9 million. The growth was attributed to strong demand in home appliances, traction, electric drives, photovoltaic’s and win power.
Power Management & Multi-market (PMM) revenues increased 5.3% on a year-over-year basis to $555.4 million. Strong demand in AC/DC conversion and DC/DC conversion drove the results.
Moreover, Chip Card & Security (CCS) revenues declined 6.6% from the year-ago quarter to $180.5 million. Lower demand for conventional SIM cards was primarily responsible for the decline.
Segment-wise, ATV, Industrial Power Control, and Power Management & Multi-market operating margins expanded 420 basis points (bps), 450 bps and 90 bps, respectively. Chip Card & Security operating margins contracted 270 bps from the year-ago quarter.
In total, operating margin expanded 210 bps on a year-over-year basis to 12.8%.
Guidance
For third-quarter 2017, Infineon expects revenues to increase 3% (+/- 2%) sequentially. At the mid-point of the forecast revenue range, the segment operating margin is expected to be 17.5%.
For fiscal 2017, Infineon continues to forecast revenue growth around 8%-11% and a segment operating margin of 17% at the mid-point of revenue guidance.
Long-term earnings growth rate for Applied Optoelectronics and Texas Instrument is currently pegged at 20% and 9.6%, respectively.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Infineon (IFNNY) Q2 Earnings Miss, Revenues Beat Estimates
Infineon Technologies AG (IFNNY - Free Report) reported second-quarter adjusted earnings of 21 cents per share, which missed the Zacks Consensus Estimate by 4 cents but increased almost 9% on a year-over-year basis.
Moreover, revenues increased 9.7% year over year to $1.89 billion in the quarter, slightly better than the Zacks Consensus Estimate of $1.88 billion. The top-line growth came on the back of strong sales in three of the company’s four business segments. Power now represents almost 60% of revenues in the reported quarter.
The quarterly results demonstrated Infineon’s strong growth prospects in the automotive market. The company’s products are currently used by eight of the top-10 electric vehicle makers including Tesla (TSLA - Free Report) , BMW and Renault. Moreover, the company’s focus on developing energy-efficient solutions will be a key catalyst going ahead.
Automatic Data Processing, Inc. Price, Consensus and EPS Surprise
Automatic Data Processing, Inc. Price, Consensus and EPS Surprise | Automatic Data Processing, Inc. Quote
We note that Infineon has outperformed the Zacks Electronics Semiconductors industry on a year-to-date basis. While the stock returned 19.6%, the industry gained 17%.
Quarter Details
Automotive (ATV) revenues increased 16.7% year over year to $836.2 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 10.6% year over year to $312.9 million. The growth was attributed to strong demand in home appliances, traction, electric drives, photovoltaic’s and win power.
Power Management & Multi-market (PMM) revenues increased 5.3% on a year-over-year basis to $555.4 million. Strong demand in AC/DC conversion and DC/DC conversion drove the results.
Moreover, Chip Card & Security (CCS) revenues declined 6.6% from the year-ago quarter to $180.5 million. Lower demand for conventional SIM cards was primarily responsible for the decline.
Segment-wise, ATV, Industrial Power Control, and Power Management & Multi-market operating margins expanded 420 basis points (bps), 450 bps and 90 bps, respectively. Chip Card & Security operating margins contracted 270 bps from the year-ago quarter.
In total, operating margin expanded 210 bps on a year-over-year basis to 12.8%.
Guidance
For third-quarter 2017, Infineon expects revenues to increase 3% (+/- 2%) sequentially. At the mid-point of the forecast revenue range, the segment operating margin is expected to be 17.5%.
For fiscal 2017, Infineon continues to forecast revenue growth around 8%-11% and a segment operating margin of 17% at the mid-point of revenue guidance.
Zacks Rank & Key Picks
Infineon currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader sector include Applied Optoelectronics (AAOI - Free Report) and Texas Instruments (TXN - Free Report) . Both the 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 and Texas Instrument is currently pegged at 20% and 9.6%, respectively.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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