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Lam Research (LRCX) Q4 Earnings & Revenues Beat Estimates

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Lam Research Corporation (LRCX - Free Report) reported fourth-quarter fiscal 2020 non-GAAP earnings of $4.78 per share, which surpassed the Zacks Consensus Estimate of $4.20. Also, the figure increased 20% sequentially.

Adjusted revenues increased 12% sequentially and 18.2% year over year to $2.79 billion. The reported revenues outpaced the Zacks Consensus Estimate by 2.4%.

Following the stronger-than-expected fiscal fourth-quarter results, its share price rose 2.8% in after-hours trading.

During the quarter, the company saw an increase in NAND demand related to 5G migration, video, and new game consoles. It witnessed persistent Foundry strength in the quarter. Also, there was an accelerated demand for remote equipment support.

WFE spending for 2020 is estimated in the mid- to high-$50 billion range.

Lam Research Corporation Price, Consensus and EPS Surprise

Lam Research Corporation Price, Consensus and EPS Surprise

Lam Research Corporation price-consensus-eps-surprise-chart | Lam Research Corporation Quote

Top Line in Detail

China, Korea and Taiwan accounted for 34%, 32% and 11% of the company’s total fiscal fourth-quarter revenues, respectively. On the contrary, Japan, the United States, Southeast Asia and Europe accounted for 8%, 7%, 5% and 3%, respectively.

Operating Details

Non-GAAP gross margin came in at 46.1%, which contracted 20 basis points (bps) sequentially.

Non-GAAP operating expenses were $493.1 million, reflecting an increase of 1.4% sequentially. However, as a percentage of revenues, the figure contracted 170 bps sequentially to 17.7%.

Adjusted operating margin was 28.5%, up 160 bps sequentially.

Balance Sheet & Cash Flow

At fiscal fourth quarter-end, cash and cash equivalents, as well as short-term investments increased to $6.7 billion from $5.4 billion in the fiscal third quarter.

Cash flow from operating activities was $813 million, up from $541.4 million in the fiscal third quarter. Capital expenditures were $50.6 million, down from $51.4 million in the fiscal third quarter.

During the quarter, Lam Research paid dividends of $167.7 million.

Guidance

For first-quarter fiscal 2021, Lam Research projects revenues to be $3.1 billion (+/- $200 million). The Zacks Consensus Estimate for the same is pegged at $2.65 billion.

Gross margin is projected at 46.5% (+/-1%) and operating margin is expected to be 29.5% (+/-1%).

Non-GAAP earnings are projected at $5.15 (+/- 40 cents) per share on a share count of 147 million. The Zacks Consensus Estimate for non-GAAP earnings per share is pegged at $4.21.

Zacks Rank & Stocks to Consider

Currently, Lam Research has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are Dropbox (DBX - Free Report) , Everbridge (EVBG - Free Report) and Analog Devices (ADI - Free Report) . While both Dropbox and Everbridge sport a Zacks Rank #1 (Strong Buy), Analog Devices carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Both Dropbox and Everbridge are scheduled to report earnings on Aug 6. Analog Devices is set to release quarterly results on Aug 19.

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