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Qorvo (QRVO) Up 2.4% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Qorvo (QRVO - Free Report) . Shares have added about 2.4% in that time frame, outperforming the S&P 500.

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

Qorvo Beats Q3 Earnings Estimates on Higher Revenues

Qorvo reported solid third-quarter fiscal 2022 results driven by secular growth drivers in 5G, IoT connectivity, defense and power. Both the bottom line and the top line surpassed the respective Zacks Consensus Estimate, backed by the strength of the business model and expansion of its regional footprint.

Net Income

GAAP net income in the reported quarter was $216.3 million or $1.95 per share compared with $201 million or $1.74 per share in the prior-year period. Despite higher operating expenses, the year-over-year increase in earnings was primarily attributable to top-line growth.

Non-GAAP earnings in the reported quarter were $330.4 million or $2.98 per share, down from $356.7 million or $3.08 per share in the year-ago quarter. The bottom line exceeded management’s guidance and beat the Zacks Consensus Estimate by 22 cents.

Quarter Details

Non-GAAP revenues improved to $1,114 million from $1,094.8 million in the year-ago quarter. The year-over-year increase in revenues was driven by broad-based demand across markets, customer smartphone ramp up and growth in Infrastructure and Defense products (IDP). Revenues beat the Zacks Consensus Estimate of $1,107 million.

By segment, Mobile Products revenues were $848 million due to the launch of a number of premium smartphones and higher flagship volume. Revenues from IDP were $266 million with healthy demand from infrastructure and programmable power management tools. Qorvo continues to reposition its IDP product portfolio to support high-growth markets.

Non-GAAP gross margin was 52.6% compared with 54.4% in the year-ago quarter. Non-GAAP income from operations was $372 million, down from $401.4 million.

Balance Sheet & Cash Flow

At quarter-end, cash and cash equivalents were $988.5 million, while long-term debt was $2,046.9 million. Net cash provided by operating activities was $117 million with free cash flow of $66.5 million at the end of the quarter.

Outlook

Qorvo expects revenues in fourth-quarter fiscal 2022 to be $1,135–$1,165 million, given a healthy demand schedule. The company expects a non-GAAP gross margin of approximately 52% and non-GAAP earnings in the vicinity of $2.94 per share.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

At this time, Qorvo has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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. Notably, Qorvo has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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