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Amkor Technology (AMKR) Up 27.8% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Amkor Technology (AMKR - Free Report) . Shares have added about 27.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Amkor Technology due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Amkor’s Q3 Earnings and Revenues Surpass Estimates
Amkor Technology reported third-quarter 2020 earnings of 38 cents per share, beating the Zacks Consensus Estimate by 46.1%. The figure improved 65.2% from both the year-ago quarter and the previous quarter.
Revenues of $1.35 billion surpassed the Zacks Consensus Estimate by 8.3%. The figure improved 25% year over year and 15.4% sequentially.
Top-line growth was driven by solid demand in the overall automotive, communications and industrial end-markets during the reported quarter.
However, the slow recovery in the automotive market of Japan was concerning.
Further, uncertainties related to the coronavirus pandemic remain headwinds for the company.
Nevertheless, the company’s strengthening momentum across 5G, advanced automotive systems, IoT wearables and high-performance computing on the heels of its robust advanced packaging technologies is likely to drive its financial performance in the days ahead.
Further, the company’s focus toward shareholders’ returns is expected to help the stock rebound in the near term. Notably, Amkor has initiated a regular quarterly cash dividend of 4 cents per share.
Revenues in Terms of Product Lines
Advanced Products — which includes flip chip scale packages, wafer-level chip scale packages and flip chip ball grid array packages — accounted for 66.4% of third-quarter revenues. Revenues improved 52.6% year over year to $899 million.
Mainstream Products — which includes lead frame packages, substrate-based wire bond packages, and MEMS packages — accounted for the remaining 33.6% of third-quarter revenues. Revenues declined 8.1% year over year to $455 million.
End-Market Details
Communications: The company generated 43% of its total revenues from this market. The top line in this market grew 30% year over year, owing to the launch of next-generation premium smartphones and the strong position of Amkor in the mobile market.
Consumer: 25% of the company’s revenues were generated from this market during the reported quarter. Further, revenues from this market went up 70% from the year-ago quarter. The company continued to capitalize on the prospects present in the consumer IoT space on the back of its strong investments in capacity and technology.
Automotive, Industrial & Other: 17% of the company’s revenues were generated from this market in the third quarter. Amkor delivered a better-than-expected performance in this market, owing to improved demand for advanced products. Further, ramping up customer orders was a major positive.
Computing: The company generated 15% of its total revenues from this market. The top line in this market grew 21% year over year, owing to strengthening momentum across data center, infrastructure, storage and personal computing applications.
Operating Details
Per management, gross margin of 17.8% expanded 100 basis points (bps) from the year-ago quarter.
Operating expenses of $113.6 million increased 9.9% year over year. As a percentage of revenues, the figure contracted 110 bps year over year.
Operating margin was 9.4%, which expanded 210 bps from the prior-year quarter.
Balance Sheet
As of Sep 30, 2020, cash and short-term investments were $922.9 million compared with $1.1 billion as ofJun 30, 2020.
Further, total debt was $1.3 billion at the end of the third quarter, down from $1.5 billion at the end of the second quarter. Net debt was $396 million in the reported quarter versus $451 million in the prior quarter.
Guidance
For fourth-quarter 2020, Amkor expects revenues of $1.25-$1.35 billion. The increase is likely to be driven by the launch of flagship smartphones, including more 5G models.
Gross margin is expected to be 17-20%.
Further, earnings are expected to be28-47 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 54.17% due to these changes.
VGM Scores
Currently, Amkor Technology has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Amkor Technology 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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Amkor Technology (AMKR) Up 27.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Amkor Technology (AMKR - Free Report) . Shares have added about 27.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Amkor Technology due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Amkor’s Q3 Earnings and Revenues Surpass Estimates
Amkor Technology reported third-quarter 2020 earnings of 38 cents per share, beating the Zacks Consensus Estimate by 46.1%. The figure improved 65.2% from both the year-ago quarter and the previous quarter.
Revenues of $1.35 billion surpassed the Zacks Consensus Estimate by 8.3%. The figure improved 25% year over year and 15.4% sequentially.
Top-line growth was driven by solid demand in the overall automotive, communications and industrial end-markets during the reported quarter.
However, the slow recovery in the automotive market of Japan was concerning.
Further, uncertainties related to the coronavirus pandemic remain headwinds for the company.
Nevertheless, the company’s strengthening momentum across 5G, advanced automotive systems, IoT wearables and high-performance computing on the heels of its robust advanced packaging technologies is likely to drive its financial performance in the days ahead.
Further, the company’s focus toward shareholders’ returns is expected to help the stock rebound in the near term. Notably, Amkor has initiated a regular quarterly cash dividend of 4 cents per share.
Revenues in Terms of Product Lines
Advanced Products — which includes flip chip scale packages, wafer-level chip scale packages and flip chip ball grid array packages — accounted for 66.4% of third-quarter revenues. Revenues improved 52.6% year over year to $899 million.
Mainstream Products — which includes lead frame packages, substrate-based wire bond packages, and MEMS packages — accounted for the remaining 33.6% of third-quarter revenues. Revenues declined 8.1% year over year to $455 million.
End-Market Details
Communications: The company generated 43% of its total revenues from this market. The top line in this market grew 30% year over year, owing to the launch of next-generation premium smartphones and the strong position of Amkor in the mobile market.
Consumer: 25% of the company’s revenues were generated from this market during the reported quarter. Further, revenues from this market went up 70% from the year-ago quarter. The company continued to capitalize on the prospects present in the consumer IoT space on the back of its strong investments in capacity and technology.
Automotive, Industrial & Other: 17% of the company’s revenues were generated from this market in the third quarter. Amkor delivered a better-than-expected performance in this market, owing to improved demand for advanced products. Further, ramping up customer orders was a major positive.
Computing: The company generated 15% of its total revenues from this market. The top line in this market grew 21% year over year, owing to strengthening momentum across data center, infrastructure, storage and personal computing applications.
Operating Details
Per management, gross margin of 17.8% expanded 100 basis points (bps) from the year-ago quarter.
Operating expenses of $113.6 million increased 9.9% year over year. As a percentage of revenues, the figure contracted 110 bps year over year.
Operating margin was 9.4%, which expanded 210 bps from the prior-year quarter.
Balance Sheet
As of Sep 30, 2020, cash and short-term investments were $922.9 million compared with $1.1 billion as ofJun 30, 2020.
Further, total debt was $1.3 billion at the end of the third quarter, down from $1.5 billion at the end of the second quarter. Net debt was $396 million in the reported quarter versus $451 million in the prior quarter.
Guidance
For fourth-quarter 2020, Amkor expects revenues of $1.25-$1.35 billion. The increase is likely to be driven by the launch of flagship smartphones, including more 5G models.
Gross margin is expected to be 17-20%.
Further, earnings are expected to be28-47 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 54.17% due to these changes.
VGM Scores
Currently, Amkor Technology has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Amkor Technology has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.