It has been about a month since the last earnings report for NXP Semiconductors (NXPI Quick QuoteNXPI - Free Report) . Shares have added about 2.2% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.

NXP Q2 Earnings & Revenues Surpass Estimates

NXP Semiconductors reported second-quarter 2021 non-GAAP earnings of $2.38 per share, which outpaced the Zacks Consensus Estimate by 3.03%. Further, the figure increased 240% year over year and 3.03% sequentially.

Revenues of $2.59 billion surpassed the Zacks Consensus Estimate of $2.58 billion. The figure was up 43% from the year-ago period and 1% on a sequential basis.

Top-line growth was driven by strong performance across automotive, mobile, and industrial and IoT end markets in the reported quarter.

However, softness in the communications market and supply-chain disruptions were overhangs.

End-Market Detail

Automotive generated $1.3 billion in revenues (contributing 48.6% to the total revenues), which reflects a year-over-year increase of 87%.

Revenues from Industrial & IoT were $571 million (22% of total revenues), which rose 531% from the prior-year quarter.

Revenues from Mobile were $347 million (13.4% of total revenues), up 36% from the year-ago level.

Communication Infrastructure & Others generated $416 million in revenues (which contributed 16% to the total revenues), down 8% year over year.

Operating Results

Non-GAAP gross margin was 56.1%, which expanded 700 basis points (bps) from the year-ago quarter.

Operating expenses were $849 million, down 15.4% year over year. As a percentage of revenues, the figure significantly contracted to 32.7% from 55.3% in the prior-year quarter.

Non-GAAP operating margin of 32% for the reported quarter expanded from 20.7% in the prior-year period.

Balance Sheet & Cash Flow

As of Jul 4, 2021, cash and cash equivalent balance were $2.9 billion compared with $1.8 billion as of Apr 4, 2021.

Inventories were $1.12 billion at the end of the second quarter, up from $1.06 billion at the end ofthe first quarter. Accounts receivables increased to $991 million from $833 million in the previous quarter.

Long-term debt was $9.6 billion at the end of the quarter under review compared with $7.6 billion at the end of the last reported quarter.

The company generated a cash flow of $636 million in the second quarter, down from $732 million in the first quarter.

Its capex investment stood at $150 million. It generated a free cash flow of $486 million in the reported quarter.

In the second quarter, NXP Semiconductors returned $1.4 billion to shareholders primarily through share repurchases and dividend payments.

3Q21 Guidance

For third-quarter 2021, the company expects revenues of $2.775-$2.925 billion, suggesting year-over-year growth of 22-29%.

The company expects non-GAAP gross margin between 56% and 56.6%. Non-GAAP operating margin is anticipated between 32.4% and 33.6%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 11.96% due to these changes.

VGM Scores

At this time, NXP has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, 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 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 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.