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Why Is Semtech (SMTC) Down 14.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for Semtech (SMTC - Free Report) . Shares have lost about 14.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Semtech due for a breakout? 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.
Semtech Q1 Earnings and Revenues Top Estimates
Semtech Corporation’s first-quarter fiscal 2023 non-GAAP earnings of 80 cents per share surpassed the Zacks Consensus Estimate by 5.3%. The reported earnings increased 50.9% year over year and 14.3% sequentially.
Net sales of $202.2 million also outpaced the Zacks Consensus Estimate by 1.2%. The same increased 18.7% from the prior-year quarter and 6.1% on a sequential basis.
The top-line growth was driven by strong momentum across the industrial and infrastructure markets served.Semtech’s LoRa business, Tri-Edge platform, 10G and 2.5G PON products plus 5G and systems protection platforms contributed well to its quarterly performance. Further, SMTC released 9 new products across the portfolio and achieved 3,200 design wins in the fiscal first quarter.
For the fiscal first quarter, shipments in Asia, North America and Europe represented 76%, 13% and 11% of net sales, respectively.
Revenues by End Market
Net revenues from the infrastructure market were $76.2 million, representing 37% of its total revenues. The metric increased 24% year over year and 11% from the prior quarter’s level.
Net revenues from the industrial market, representing 39% of total net revenues, were $78.1 million. Revenues increased 42% from the prior-year period’s level and 4% sequentially.
Net revenues from the high-end consumer market, representing 24% of total revenues, were $47.8 million. Revenues rose 2% sequentially but declined 11% year over year. The high-end consumer market consists of mobile devices and other consumer systems, both reflecting net revenues of 12%.
Revenues by Product Group
Signal Integrity Product Group’s revenues amounted to $79.3 million, contributing 40% to total revenues. The reported figure increased 19% year over year, driven by strong demand in the PON and data center markets. Also, the growing global Tri-Edge design wins in 100-gig, 200-gig and 400-gig PAM4 optical modules remain a tailwind.
Revenues from its Protection Product Group accounting for 27% of the total revenues, were $55.5 million. The figure was up 23% year over year. The increase was driven by robust smartphone demand and broad consumer demand.
Wireless and Sensing Product Group revenues were $67.3 million, contributing 33% to total revenues. The same increased 15% from the prior-year period’s level. The upside was driven by record net sales of LoRa platform products.
Operating Results
Non-GAAP gross margin of 64.8% expanded 280 basis points (bps) year over year. Non-GAAP operating margin of 29.8% expanded 550 bps from the same quarter’s figure last year.
Adjusted selling, general and administrative expenses for the fiscal first quarter increased 16% year over year to $36.1 million. Adjusted product development and engineering expenses also increased 5.4% from the year-ago quarter’s number to $34.8 million.
Balance Sheet and Cash Flow
As of May 1, 2022, cash and cash equivalents were $275.2 million compared with $279.6 million on Jan 30, 2021. Account receivables for the reported quarter were $66.4 million, down from $71.5 million in fourth-quarter fiscal 2021.
Long-term debt was $181.8 million, up from $171.7 million in the previous quarter.
For the reported quarter, cash flow from operations was $50 million compared with $51 million in the fiscal fourth quarter. Net capital expenditure was up $8.3 million from $8.1 million in the previous quarter. Free cash flow amounted to $41.7 million compared with $42.9 million in the prior quarter.
Guidance
For second-quarter fiscal 2023, management expects net sales of $203-$213 million. Non-GAAP earnings per share are expected within 80-90 cents.
Non-GAAP gross margin is expected to be 64.5-65.9%. Also, management projects SG&A expenses of $36-$37 million, and research and development costs of $35-$36 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Semtech has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 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 broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Semtech has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Semtech (SMTC) Down 14.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Semtech (SMTC - Free Report) . Shares have lost about 14.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Semtech due for a breakout? 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.
Semtech Q1 Earnings and Revenues Top Estimates
Semtech Corporation’s first-quarter fiscal 2023 non-GAAP earnings of 80 cents per share surpassed the Zacks Consensus Estimate by 5.3%. The reported earnings increased 50.9% year over year and 14.3% sequentially.
Net sales of $202.2 million also outpaced the Zacks Consensus Estimate by 1.2%. The same increased 18.7% from the prior-year quarter and 6.1% on a sequential basis.
The top-line growth was driven by strong momentum across the industrial and infrastructure markets served.Semtech’s LoRa business, Tri-Edge platform, 10G and 2.5G PON products plus 5G and systems protection platforms contributed well to its quarterly performance. Further, SMTC released 9 new products across the portfolio and achieved 3,200 design wins in the fiscal first quarter.
For the fiscal first quarter, shipments in Asia, North America and Europe represented 76%, 13% and 11% of net sales, respectively.
Revenues by End Market
Net revenues from the infrastructure market were $76.2 million, representing 37% of its total revenues. The metric increased 24% year over year and 11% from the prior quarter’s level.
Net revenues from the industrial market, representing 39% of total net revenues, were $78.1 million. Revenues increased 42% from the prior-year period’s level and 4% sequentially.
Net revenues from the high-end consumer market, representing 24% of total revenues, were $47.8 million. Revenues rose 2% sequentially but declined 11% year over year. The high-end consumer market consists of mobile devices and other consumer systems, both reflecting net revenues of 12%.
Revenues by Product Group
Signal Integrity Product Group’s revenues amounted to $79.3 million, contributing 40% to total revenues. The reported figure increased 19% year over year, driven by strong demand in the PON and data center markets. Also, the growing global Tri-Edge design wins in 100-gig, 200-gig and 400-gig PAM4 optical modules remain a tailwind.
Revenues from its Protection Product Group accounting for 27% of the total revenues, were $55.5 million. The figure was up 23% year over year. The increase was driven by robust smartphone demand and broad consumer demand.
Wireless and Sensing Product Group revenues were $67.3 million, contributing 33% to total revenues. The same increased 15% from the prior-year period’s level. The upside was driven by record net sales of LoRa platform products.
Operating Results
Non-GAAP gross margin of 64.8% expanded 280 basis points (bps) year over year. Non-GAAP operating margin of 29.8% expanded 550 bps from the same quarter’s figure last year.
Adjusted selling, general and administrative expenses for the fiscal first quarter increased 16% year over year to $36.1 million. Adjusted product development and engineering expenses also increased 5.4% from the year-ago quarter’s number to $34.8 million.
Balance Sheet and Cash Flow
As of May 1, 2022, cash and cash equivalents were $275.2 million compared with $279.6 million on Jan 30, 2021. Account receivables for the reported quarter were $66.4 million, down from $71.5 million in fourth-quarter fiscal 2021.
Long-term debt was $181.8 million, up from $171.7 million in the previous quarter.
For the reported quarter, cash flow from operations was $50 million compared with $51 million in the fiscal fourth quarter. Net capital expenditure was up $8.3 million from $8.1 million in the previous quarter. Free cash flow amounted to $41.7 million compared with $42.9 million in the prior quarter.
Guidance
For second-quarter fiscal 2023, management expects net sales of $203-$213 million. Non-GAAP earnings per share are expected within 80-90 cents.
Non-GAAP gross margin is expected to be 64.5-65.9%. Also, management projects SG&A expenses of $36-$37 million, and research and development costs of $35-$36 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Semtech has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 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 broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Semtech has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.