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Qorvo (QRVO) Down 4.6% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Qorvo (QRVO - Free Report) . Shares have lost about 4.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Qorvo due for a breakout? 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.
Qorvo reported first-quarter fiscal 2022 non-GAAP earnings of $2.74 per share, which soared 88.7% on a year-over-year basis and surpassed the Zacks Consensus Estimate by 15.5%.
Revenues surged 41% year over year to $1.11 billion and outpaced the consensus mark by 2.8%. The company gained from strong demand for 5G diversity receive modules, MEMS-based touch sensors and Wi-Fi 6E FEMs.
Accelerated deployment of 5G, the roll-out of Wi-Fi 6 and 6E technologies, and advancement in applications based on Wi-Fi, Bluetooth, Zigbee, Thread and ultrawide band technologies are favoring the company’s prospects.
Quarter Details
Segment-wise, Mobile Product (“MP”) revenues of $836 million surged 79% year over year, driven by higher 5G content in smartphones.
Infrastructure and Defense (“IDP”) revenues were $274 million, down year over year, primarily due to tough comparison.
Non-GAAP gross margin expanded 380 basis points (bps) from the year-ago quarter to 52.5%. Better-than-expected gross margin can be attributed to better-than-expected price and favorable mix, improved manufacturing yields and lower inventory costs.
Non-GAAP operating expenses increased 36.9% year over year to $215.6 million. As a percentage of revenues, the figure contracted 330 bps year over year to 19.4%.
Non-GAAP operating income surged 80.2% to $367 million. Non-GAAP operating margin expanded 720 bps from the year-ago quarter to 33.1%. This can be attributed to gross margin expansion and lower operating expenses.
Balance Sheet & Cash Flow
As of Jul 3, 2021, cash and cash equivalents were $1.20 billion compared with $1.398 billion reported as of Apr 3, 2021.
As of Jul 3, 2021, long-term debt was $1.741 billion, with “no material near-term maturities” compared with $1.743 billion as of Apr 3, 2021.
Net cash provided by operating activities was $341.6 million compared with $402.9 million in the prior quarter. Free cash flow during the reported quarter amounted to $276.3 million compared with $325.5 million in the prior quarter.
During the fiscal first quarter, the company repurchased shares worth $300 million.
Guidance
For second-quarter fiscal 2022, Qorvo anticipates revenues between $1.235 billion and $1.265 billion, with MP and IDP contributing $985 million and $265 million, respectively.
Non-GAAP gross margin is anticipated between 52% and 52.5%.
Non-GAAP earnings are projected to be $3.24 per share (at the mid-point of the revenue guidance).
Non-GAAP operating expenses are anticipated to increase in the second quarter to approximately $233 million due to higher labor and other development expenses associated with recent acquisitions and key growth programs.
For calendar 2021, Qorvo expects 5G smartphone shipments to double to around 550 million. Within 5G smartphones, the company estimates the RF content to increase $5 to $7 per phone in comparison to 4G, including in the mid-tier. In 2025, 5G units are expected to be approximately 80% of total units.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 7.06% due to these changes.
VGM Scores
At this time, Qorvo has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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 Qorvo has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Qorvo (QRVO) Down 4.6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Qorvo (QRVO - Free Report) . Shares have lost about 4.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Qorvo due for a breakout? 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.
Qorvo Q1 Earnings Beat Estimates, Revenues Rise Y/Y
Qorvo reported first-quarter fiscal 2022 non-GAAP earnings of $2.74 per share, which soared 88.7% on a year-over-year basis and surpassed the Zacks Consensus Estimate by 15.5%.
Revenues surged 41% year over year to $1.11 billion and outpaced the consensus mark by 2.8%. The company gained from strong demand for 5G diversity receive modules, MEMS-based touch sensors and Wi-Fi 6E FEMs.
Accelerated deployment of 5G, the roll-out of Wi-Fi 6 and 6E technologies, and advancement in applications based on Wi-Fi, Bluetooth, Zigbee, Thread and ultrawide band technologies are favoring the company’s prospects.
Quarter Details
Segment-wise, Mobile Product (“MP”) revenues of $836 million surged 79% year over year, driven by higher 5G content in smartphones.
Infrastructure and Defense (“IDP”) revenues were $274 million, down year over year, primarily due to tough comparison.
Non-GAAP gross margin expanded 380 basis points (bps) from the year-ago quarter to 52.5%. Better-than-expected gross margin can be attributed to better-than-expected price and favorable mix, improved manufacturing yields and lower inventory costs.
Non-GAAP operating expenses increased 36.9% year over year to $215.6 million. As a percentage of revenues, the figure contracted 330 bps year over year to 19.4%.
Non-GAAP operating income surged 80.2% to $367 million. Non-GAAP operating margin expanded 720 bps from the year-ago quarter to 33.1%. This can be attributed to gross margin expansion and lower operating expenses.
Balance Sheet & Cash Flow
As of Jul 3, 2021, cash and cash equivalents were $1.20 billion compared with $1.398 billion reported as of Apr 3, 2021.
As of Jul 3, 2021, long-term debt was $1.741 billion, with “no material near-term maturities” compared with $1.743 billion as of Apr 3, 2021.
Net cash provided by operating activities was $341.6 million compared with $402.9 million in the prior quarter. Free cash flow during the reported quarter amounted to $276.3 million compared with $325.5 million in the prior quarter.
During the fiscal first quarter, the company repurchased shares worth $300 million.
Guidance
For second-quarter fiscal 2022, Qorvo anticipates revenues between $1.235 billion and $1.265 billion, with MP and IDP contributing $985 million and $265 million, respectively.
Non-GAAP gross margin is anticipated between 52% and 52.5%.
Non-GAAP earnings are projected to be $3.24 per share (at the mid-point of the revenue guidance).
Non-GAAP operating expenses are anticipated to increase in the second quarter to approximately $233 million due to higher labor and other development expenses associated with recent acquisitions and key growth programs.
For calendar 2021, Qorvo expects 5G smartphone shipments to double to around 550 million. Within 5G smartphones, the company estimates the RF content to increase $5 to $7 per phone in comparison to 4G, including in the mid-tier. In 2025, 5G units are expected to be approximately 80% of total units.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 7.06% due to these changes.
VGM Scores
At this time, Qorvo has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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 Qorvo has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.