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Why Is Lam Research (LRCX) Up 8.2% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Lam Research Corporation (LRCX - Free Report) . Shares have added about 8.2% in the past month, outperforming 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 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.
Lam Research Tops Q3 Earnings, Revenue Estimates
Lam Research reported third-quarter fiscal 2017 non-GAAP earnings of $2.80 per share, surpassing the Zacks Consensus Estimate of $2.54. Earnings were up 16% sequentially and 130.9% year over year.
Revenues
Revenues of $2.15 billion increased 14.4% sequentially and 63.9% year over year. Also, revenues were above the Zacks Consensus Estimate of $2.125 billion.
Revenues by Geography
Region wise, Korea contributed 34%, Taiwan accounted for 28% and Japan and China each contributed 11% of third-quarter revenues. The U.S., Europe and Southeast Asia generated 9%, 4% and 3%, respectively.
Shipments
Total system shipments were $2.41 billion during the reported quarter, up 25.5% from $1.92 billion reported last quarter.
Margins
Non-GAAP gross profit was $992.7 million or 46.1% of revenues, reflecting a decrease of 36 basis points (bps) sequentially but an increase of 99 bps year over year.
Total adjusted operating expenses were $414.2 million, 7.8% higher sequentially. Operating margin was 26.9%, reflecting an increase of 83 bps from the prior quarter and 842 bps from the year-ago quarter.
Net Income
GAAP net income was $574.7 million ($3.10 per share) compared with $332.8 million ($1.81 per share) last quarter and $143.5 million ($0.82 per share) in the year-ago quarter.
Non-GAAP net income was $507.8 million compared with $405.2 million in the last quarter and $405.2 million in the year-ago quarter.
Balance Sheet
Exiting fiscal third-quarter 2017, cash and cash equivalents, short-term investments, and restricted cash and investment balances were $5.9 billion compared with $5.8 billion at the end of fiscal second-quarter 2017.
Cash flow from operating activities was $422.7 million against $404.1 million in the previous quarter. Capital expenditures amounted to $44.1 million. The company paid $73.3 million in cash dividends to stockholders during the Mar 2017 quarter.
Guidance
Lam Research provided guidance for the fourth quarter of fiscal 2017.
On a non-GAAP basis, the company expects revenues of approximately $2.3 billion (+/- $100 million). Shipments are projected to be roughly $2.5 billion (+/- $100 million). Gross margin is predicted at around 46.0% (+/-1%), while operating margin is likely to be about 27% (+/-1%).
Earnings per share are projected at $3 (+/- 12 cents) on a share count of nearly 180 million. The Zacks Consensus Estimate is pegged at $2.63 per share, which makes the guidance better than expected. GAAP earnings per share are projected at $2.73 (+/- 12 cents).
Our Take
Lam Research delivered strong fiscal third-quarter 2017 results with both earnings and revenues outperforming our estimates.
Calendar year 2016 was pretty good for the company and it continues to see strong success in the areas of device architecture, process flow and advanced packaging technology inflections.
The company has been improving on the WFE market share significantly since 2013 and expects to continue making gains.
Lam Research continues to see increased adoption rates of 3D NAND technology, FinFETs and multi-patterning. The company has initiated cost reduction and density scaling for 3D NAND and new memory technologies.
The company is likely to remain the market leader in dielectric etches as VECTOR Strata and ALTUS deposition, and its Flex and Kiyo etch products have been extremely successful. It anticipates strong demand for leading-edge silicon in the enterprise market to continue driven by the long-term move to the cloud, storage and networking applications.
Moreover, Lam Research is making good progress with its customer support business and anti-trust agency reviews.
However, concerns persist in the form of volatility and lower growth expectations globally, with a slow-but-steady improvement in some developed markets balancing the weakness in certain emerging economies.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been six upward revisions for the current quarter, while looking back an additional 30 days, we can see even more upward momentum. Seven estimates have moved up in the last two months. In the past month, the consensus estimate improved 14.9% due to these changes.
At this time, the stock has a subpar Growth Score of 'D'. However, its Momentum is doing a bit better with a 'C'. Following the exact same course, 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 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the stock is suitable for value and momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Lam Research (LRCX) Up 8.2% Since the Last Earnings Report?
A month has gone by since the last earnings report for Lam Research Corporation (LRCX - Free Report) . Shares have added about 8.2% in the past month, outperforming 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 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.
Lam Research reported third-quarter fiscal 2017 non-GAAP earnings of $2.80 per share, surpassing the Zacks Consensus Estimate of $2.54. Earnings were up 16% sequentially and 130.9% year over year.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been six upward revisions for the current quarter, while looking back an additional 30 days, we can see even more upward momentum. Seven estimates have moved up in the last two months. In the past month, the consensus estimate improved 14.9% due to these changes.
Lam Research Corporation Price and Consensus
Lam Research Corporation Price and Consensus | Lam Research Corporation Quote
VGM Scores
At this time, the stock has a subpar Growth Score of 'D'. However, its Momentum is doing a bit better with a 'C'. Following the exact same course, 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 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the stock is suitable for value and momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.