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Amkor (AMKR) Beats Earnings and Revenue Estimates in Q4
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Amkor Technology, Inc. (AMKR - Free Report) reported fourth-quarter 2018 adjusted earnings of 12 cents per share, surpassing the Zacks Consensus Estimate of 8 cents.
Revenues of $1.08 billion beat the Zacks Consensus Estimate by 1.96% and were within the company’s guided range of $1.02-$1.10 billion. However, revenues decreased 5.5% sequentially and 6% year over year.
The top line was driven by strength in nearly all its end markets. Revenues were up 5% in communications and 2% in automotive and industrial, offset by a customer specific inventory correction in Japan. Computing was up 3% but consumer was down 3%.
The company has been making efforts to channelize its resources in important growth areas like MEMS and sensors business, which focus on mobile and automotive applications. In this regard, Amkor recently added a third MEMS and sensor production line in Korea to attract more business.
The company remains optimistic about automotive business growth. Per market forecast, the automotive market will grow in high single digits in the coming years. The growth is expected to be driven by increasing electronic content. Given attractive value proposition for automotive customers, the company is poised to benefit going ahead.
Revenues by Product Lines
The revenue mix in terms of product linesis discussed below.
Advanced Products include flip chip scale packages, wafer-level chip scale packages and flip chip ball grid array packages. It accounted for approximately 52% of fourth-quarter revenues. Revenues decreased 3.1% sequentially and 3.1% year over year.
Mainstream Products include lead frame packages, substrate-based wire bond packages and MEMS packages. It accounted for the remaining 48% of fourth-quarter revenues. Revenues decreased 8% sequentially and 9% year over year.
Margins
Per the press release, gross margin of 16.9%, up 200 basis points (bps),was above the high end of guidance, primarily due to higher sales and favorable product mix. However, gross margins were down 60 bps sequentially and 260 bps from the year-ago quarter.
Operating expenses of $107 million decreased 7.2% year over year. As a percentage of sales, selling, general and administrative expenses decreased, while research and development expenses marked an increase.
As a result, reported operating margin was 7%, down 250 bps from the prior-year quarter.
Balance Sheet & Cash Flow
Free cash flow was $120 million compared with negative $100 million in the third quarter.
Total cash, cash equivalents and restricted cash were $684.2 million, up from $382.3 million in the last reported quarter. Long-term debt in the quarter was $1.2 billion.
Guidance
For the first quarter, Amkor expects revenues in the range of $840-$920 million, down sequentially. The decrease reflects the inventory correction, currently underway in the smartphone market. The Zacks Consensus Estimate for revenues is pegged at $1.03 billion. Gross margin is expected within 9-13%. Earnings per share are expected in the range of (27)-(7) cents on a GAAP basis.
Amkor Technology, Inc. Price, Consensus and EPS Surprise
Long-term earnings growth rate for Cognex, AMETEK and Inphi is projected to be 9.58% and 18.5%, respectively.
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Amkor (AMKR) Beats Earnings and Revenue Estimates in Q4
Amkor Technology, Inc. (AMKR - Free Report) reported fourth-quarter 2018 adjusted earnings of 12 cents per share, surpassing the Zacks Consensus Estimate of 8 cents.
Revenues of $1.08 billion beat the Zacks Consensus Estimate by 1.96% and were within the company’s guided range of $1.02-$1.10 billion. However, revenues decreased 5.5% sequentially and 6% year over year.
The top line was driven by strength in nearly all its end markets. Revenues were up 5% in communications and 2% in automotive and industrial, offset by a customer specific inventory correction in Japan. Computing was up 3% but consumer was down 3%.
The company has been making efforts to channelize its resources in important growth areas like MEMS and sensors business, which focus on mobile and automotive applications. In this regard, Amkor recently added a third MEMS and sensor production line in Korea to attract more business.
The company remains optimistic about automotive business growth. Per market forecast, the automotive market will grow in high single digits in the coming years. The growth is expected to be driven by increasing electronic content. Given attractive value proposition for automotive customers, the company is poised to benefit going ahead.
Revenues by Product Lines
The revenue mix in terms of product linesis discussed below.
Advanced Products include flip chip scale packages, wafer-level chip scale packages and flip chip ball grid array packages. It accounted for approximately 52% of fourth-quarter revenues. Revenues decreased 3.1% sequentially and 3.1% year over year.
Mainstream Products include lead frame packages, substrate-based wire bond packages and MEMS packages. It accounted for the remaining 48% of fourth-quarter revenues. Revenues decreased 8% sequentially and 9% year over year.
Margins
Per the press release, gross margin of 16.9%, up 200 basis points (bps),was above the high end of guidance, primarily due to higher sales and favorable product mix. However, gross margins were down 60 bps sequentially and 260 bps from the year-ago quarter.
Operating expenses of $107 million decreased 7.2% year over year. As a percentage of sales, selling, general and administrative expenses decreased, while research and development expenses marked an increase.
As a result, reported operating margin was 7%, down 250 bps from the prior-year quarter.
Balance Sheet & Cash Flow
Free cash flow was $120 million compared with negative $100 million in the third quarter.
Total cash, cash equivalents and restricted cash were $684.2 million, up from $382.3 million in the last reported quarter. Long-term debt in the quarter was $1.2 billion.
Guidance
For the first quarter, Amkor expects revenues in the range of $840-$920 million, down sequentially. The decrease reflects the inventory correction, currently underway in the smartphone market. The Zacks Consensus Estimate for revenues is pegged at $1.03 billion. Gross margin is expected within 9-13%. Earnings per share are expected in the range of (27)-(7) cents on a GAAP basis.
Amkor Technology, Inc. Price, Consensus and EPS Surprise
Amkor Technology, Inc. Price, Consensus and EPS Surprise | Amkor Technology, Inc. Quote
Zacks Rank and Other Stocks to Consider
Currently, Amkor carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader technology sector include Cognex Corporation (CGNX - Free Report) , AMETEK, Inc. (AME - Free Report) and Inphi Corporation , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for Cognex, AMETEK and Inphi is projected to be 9.58% and 18.5%, respectively.
Zacks' Best Stock-Picking Strategy
It's hard to believe, even for us at Zacks. But from 2000-2018, while the market gained +4.8% per year, our top stock-picking strategy averaged +54.3% per year.
How has that screen done lately? From 2017-2018, it sextupled the market's +15.8% gain with a soaring +98.3% return.
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