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NXP (NXPI) Up 0.7% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for NXP Semiconductors (NXPI - Free Report) . Shares have added about 0.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is NXP 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 catalysts.

NXP Q1 Earnings & Revenues Surpass Estimates

NXP Semiconductors reported first-quarter 2021 non-GAAP earnings of $2.31 per share, which outpaced the Zacks Consensus Estimate by 4.5%. Further, the figure increased 13.2% year over year but declined13.8% sequentially.

Revenues of $2.57 billion surpassed the Zacks Consensus Estimate of $2.56 billion. The figure was up 27% from the year-ago period and 2% on a sequential basis.

Top-line growth was driven by strong performance across all end-markets in the reported quarter.

End-Markets in Detail

Automotive generated $1.23 billion in revenues (contributing 48% to the total revenues), which reflects a year-over-year increase of 24%.

Revenues from Industrial & IoT were $571 million (22% of total revenues), which rose 52% from the prior-year quarter.

Revenues from Mobile were $346 million (14% of total revenues), up 40% from the year-ago level.

Communication Infrastructure & Others generated $421 million in revenues (which contributed 16% to the total revenues), up 4% year over year.

Operating Results

Non-GAAP gross margin was 54.2%, which expanded 240 basis points (bps) from the year-ago quarter. A favorable product mix contributed well.

Operating expenses were $863 million, down 16.9% year over year. As a percentage of revenues, the figure significantly contracted to 33.6% from 51.4% in the prior-year quarter.

Non-GAAP operating margin of 30.9% for the reported quarter expanded 610 bps from the prior-year period.

Balance Sheet & Cash Flow

As of Apr 4, 2021, cash and cash equivalent balance were $1.8 billion compared with $2.3 billion as of Dec 31, 2021.

Inventories were $1.1 billion at the end of the first quarter, up from $1 billion at the end of the fourth quarter. Accounts receivables increased to $833 million from $765 million in the previous quarter.

Long-term debt was $7.611 billion at the end of the quarter under review compared to $7.609 billion at the end of the last reported quarter.

Further, the company generated cash flow of $732 million in the first quarter, down from $1.03 billion in the fourth quarter.

Furthermore, it generated a free cash flow of $582 million compared with $926 million in the prior quarter.

In the first quarter, NXP returned $1 billion to shareholders primarily through previously announced dividend payments.

2Q21 Guidance

For second-quarter 2021, NXP expects revenues of $2.50-$2.64 billion.

Further, the company expects non-GAAP gross margin between 55.2% and 55.8%. Furthermore, non-GAAP operating margin is anticipated between 30.7% and 31.9%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 8.29% due to these changes.

VGM Scores

Currently, NXP has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise NXP has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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