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Why Is NVIDIA (NVDA) Up 22.9% Since the Last Earnings Report?
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It has been about a month since the last earnings report for NVIDIA Corporation (NVDA - Free Report) . Shares have added about 22.9% in that time frame, 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 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.
NVIDIA Q1 Earnings & Revenues Top, Outlook Strong
NVIDIA posted first-quarter fiscal 2018 adjusted earnings (including stock-based compensation but excluding other one-time items) on a proportionate tax basis of $0.82 per share, beating the Zacks Consensus Estimate of $0.66 per share. Also, earnings increased from $0.39 per share reported in the year-ago quarter.
Revenues
Revenues not only increased 48.4% year over year to $1.937 billion but also surpassed the Zacks Consensus Estimate of $1.910 billion. The year-over-year increase was primarily attributable to better-than-expected growth across all the platforms, that is, GPUs gaming platform, Professional Visualization, datacenter and Tegra automotive platforms. Also, NVIDIA continued to strengthen in the artificial intelligence (AI) space, which positively impacted the quarter’s revenues.
Revenues from the GPU business increased 45% year over year to $1.56 billion, driven by strength in GeForce GPUs Gaming revenues and datacenter. Revenues from Gaming GPU increased 49% on a year-over-year basis. Revenues from datacenter (including Tesla and Grid) came in at $409 million, which more than tripled on a year-over-year basis.
Tegra processor revenues came in at $332 million, which more than doubled on a year-over-year basis. The increase was primarily due to better-than-expected growth in Tegra development services and automotive. Automotive revenues for the quarter came in at $140 million, reflecting an increase of 24% year over year, primarily from infotainment modules.
Quarter’s revenues were also positively impacted by 43 million from the Intel (INTC) agreement.
Moving to Professional Visualization, revenues from Quadro increased 8% year over year and came in at $255 million. The increase was mainly due to strong demand in real-time rendering tools and mobile workstations.
Margins
NVIDIA’s adjusted gross margin (including stock-based compensation but excluding other one-time items) expanded 106 basis points (bps) from the year-ago quarter to 59.4%. In dollar terms, gross profit came in at $1.150 billion, reflecting an increase of 51.1% from the year-ago quarter, primarily on the back of strength in GeForce GPU gaming platform and a higher revenue base.
Adjusted operating expenses increased 19.9% from the year-ago quarter to $590 million, as the company continued to invest in sales, general and administrative activities and higher research and development expenses. As a percentage of revenues, operating expenses, however, decreased 724 bps from the year-ago quarter to 30.5%.
NVIDIA’s adjusted operating margin was up from 20.6% to 28.9% during the quarter, reflecting growth in its GeForce GTX GPU business and lower operating expenses as a percentage of revenues. In dollar terms, adjusted operating income increased from $269 million to $560 million.
Balance Sheet & Cash Flow
NVIDIA exited the quarter with cash, cash equivalents and marketable securities of $6.206 billion compared with $6.798 billion in the previous quarter. NVIDIA’s total debt (including current portion) was $2.199 billion. Free cash flow in the quarter came in at $229 million, while cash flow from operations was $282 million.
During the quarter, the company paid a cash dividend of $82 million. NVIDIA also announced quarterly dividend of 14 cents per share, payable on Jun 14, 2017.
Guidance
For the second quarter of fiscal 2018, NVIDIA expects revenues of approximately $1.95 billion (+/-2%).
Non-GAAP gross margin is expected to be 58.6% (+/-50 bps). Non-GAAP operating expenses are expected to be approximately $530 million. Capital expenditures are expected to be roughly in the range of $55–$65 million. Non-GAAP tax rate is expected to be 17% (+/-1%).
For fiscal 2018, the company expects to return $1.25 billion to its shareholders in the form of cash dividends and share repurchases.
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.
At this time, the stock has a nice Growth Score of 'B', while Momentum is lagging a bit with a 'C'. However, the stock was allocated a grade of 'F' on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than for those looking for momentum.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is NVIDIA (NVDA) Up 22.9% Since the Last Earnings Report?
It has been about a month since the last earnings report for NVIDIA Corporation (NVDA - Free Report) . Shares have added about 22.9% in that time frame, 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 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.
NVIDIA Q1 Earnings & Revenues Top, Outlook Strong
NVIDIA posted first-quarter fiscal 2018 adjusted earnings (including stock-based compensation but excluding other one-time items) on a proportionate tax basis of $0.82 per share, beating the Zacks Consensus Estimate of $0.66 per share. Also, earnings increased from $0.39 per share reported in the year-ago quarter.
Revenues
Revenues not only increased 48.4% year over year to $1.937 billion but also surpassed the Zacks Consensus Estimate of $1.910 billion. The year-over-year increase was primarily attributable to better-than-expected growth across all the platforms, that is, GPUs gaming platform, Professional Visualization, datacenter and Tegra automotive platforms. Also, NVIDIA continued to strengthen in the artificial intelligence (AI) space, which positively impacted the quarter’s revenues.
Revenues from the GPU business increased 45% year over year to $1.56 billion, driven by strength in GeForce GPUs Gaming revenues and datacenter. Revenues from Gaming GPU increased 49% on a year-over-year basis. Revenues from datacenter (including Tesla and Grid) came in at $409 million, which more than tripled on a year-over-year basis.
Tegra processor revenues came in at $332 million, which more than doubled on a year-over-year basis. The increase was primarily due to better-than-expected growth in Tegra development services and automotive. Automotive revenues for the quarter came in at $140 million, reflecting an increase of 24% year over year, primarily from infotainment modules.
Quarter’s revenues were also positively impacted by 43 million from the Intel (INTC) agreement.
Moving to Professional Visualization, revenues from Quadro increased 8% year over year and came in at $255 million. The increase was mainly due to strong demand in real-time rendering tools and mobile workstations.
Margins
NVIDIA’s adjusted gross margin (including stock-based compensation but excluding other one-time items) expanded 106 basis points (bps) from the year-ago quarter to 59.4%. In dollar terms, gross profit came in at $1.150 billion, reflecting an increase of 51.1% from the year-ago quarter, primarily on the back of strength in GeForce GPU gaming platform and a higher revenue base.
Adjusted operating expenses increased 19.9% from the year-ago quarter to $590 million, as the company continued to invest in sales, general and administrative activities and higher research and development expenses. As a percentage of revenues, operating expenses, however, decreased 724 bps from the year-ago quarter to 30.5%.
NVIDIA’s adjusted operating margin was up from 20.6% to 28.9% during the quarter, reflecting growth in its GeForce GTX GPU business and lower operating expenses as a percentage of revenues. In dollar terms, adjusted operating income increased from $269 million to $560 million.
Balance Sheet & Cash Flow
NVIDIA exited the quarter with cash, cash equivalents and marketable securities of $6.206 billion compared with $6.798 billion in the previous quarter. NVIDIA’s total debt (including current portion) was $2.199 billion. Free cash flow in the quarter came in at $229 million, while cash flow from operations was $282 million.
During the quarter, the company paid a cash dividend of $82 million. NVIDIA also announced quarterly dividend of 14 cents per share, payable on Jun 14, 2017.
Guidance
For the second quarter of fiscal 2018, NVIDIA expects revenues of approximately $1.95 billion (+/-2%).
Non-GAAP gross margin is expected to be 58.6% (+/-50 bps). Non-GAAP operating expenses are expected to be approximately $530 million. Capital expenditures are expected to be roughly in the range of $55–$65 million. Non-GAAP tax rate is expected to be 17% (+/-1%).
For fiscal 2018, the company expects to return $1.25 billion to its shareholders in the form of cash dividends and share repurchases.
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.
NVIDIA Corporation Price and Consensus
NVIDIA Corporation Price and Consensus | NVIDIA Corporation Quote
VGM Scores
At this time, the stock has a nice Growth Score of 'B', while Momentum is lagging a bit with a 'C'. However, the stock was allocated a grade of 'F' on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than for those looking for momentum.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.