It has been about a month since the last earnings report for Qorvo (QRVO Quick QuoteQRVO - Free Report) . Shares have lost about 17.1% 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 the most recent earnings report in order to get a better handle on the important drivers.

Qorvo Q1 Earnings and Revenues Outpace Estimates

Qorvo reported solid first-quarter fiscal 2023 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 $68.9 million or 65 cents per share compared with $285.6 million or $2.51 per share in the prior-year period. The decline was primarily due to COVID mitigation efforts in China, the war in Ukraine and global supply chain disruptions.

Non-GAAP earnings in the reported quarter were $238.4 million or $2.25 per share, down from $322.6 million or $2.83 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $2.12.

Quarter Details

Non-GAAP revenues fell to $1,035.4 million from $1,110.4 million in the year-ago quarter. The year-over-year decline in revenues was due to the impact of global macroeconomic events on smartphone volumes, primarily within the Android ecosystem. Revenues beat the Zacks Consensus Estimate of $1,027 million.

Non-GAAP gross margin was 50% compared with 52.5% in the year-ago quarter. Non-GAAP income from operations was $284.4 million, down from $367 million. Amidst widespread supply constraints during the second quarter of the last fiscal, the company entered into a capacity reservation agreement with a silicon foundry company.

Balance Sheet

As of Jul 2, 2022, the company had $858.8 million in cash and cash equivalents with $2,047.2 million of long-term debt. Free cash flow at the end of the quarter was $229.5 million. Capital expenditure remains concentrated in areas where the company sees continued demand for differentiated products.

Outlook

For second-quarter fiscal 2023, Qorvo expects revenues to be in the range of $1.12–$1.15 billion, given a healthy demand schedule backed by an expanding market and customer exposure and a deep product and technical portfolio. The company expects non-GAAP gross margin between 49% and 50% and non-GAAP earnings in the range of $2.45-$2.65 per share. The company’s current view of the second half of the fiscal reflects lower demand, and  it will reduce factory utilization to improve its inventory position.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted 7.48% due to these changes.

VGM Scores

Currently, Qorvo has a nice Growth Score of B, though it is lagging a bit 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Qorvo has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.