A month has gone by since the last earnings report for Qorvo (QRVO Quick QuoteQRVO - Free Report) . Shares have added about 17.6% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Qorvo Tops Q2 Earnings Estimates Despite Lower Revenues

Qorvo reported solid second-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 $188.6 million or $1.82 per share compared with $319.2 million or $2.84 per share in the prior-year period. The decline was primarily due to top-line contraction.

Non-GAAP earnings in the reported quarter were $276.2 million or $2.66 per share, down from $384.5 million or $3.42 per share in the year-ago quarter. Despite the year-over-year decline, the bottom line exceeded management guidance and beat the Zacks Consensus Estimate by 11 cents.

Quarter Details

Revenues fell to $1,158.1 million from $1,255.2 million in the year-ago quarter. The year-over-year decline was due to global macroeconomic uncertainty and soft end-market demand. However, the top line exceeded the management guidance and beat the Zacks Consensus Estimate of $1,135 million.

Non-GAAP gross margin was 49.2% compared with 52.4% in the year-ago quarter owing to higher inventory-related charges and planned reduction in factory utilization. Non-GAAP income from operations was $337.7 million, down from $435.4 million.

Balance Sheet

As of Oct 1, 2022, QRVO had $911.6 million in cash and cash equivalents with $2,047.4 million of long-term debt. Free cash flow at the end of the quarter was $220.4 million. Capital expenditure remains concentrated in areas where the company sees continued demand for differentiated products.

Outlook

For third-quarter fiscal 2023, Qorvo expects revenues to be in the range of $700–$750 million, driven by continued weakness across end markets and acute inventory correction at Android-based smartphone customers. The company expects non-GAAP gross margin between 43% and 44% and non-GAAP earnings in the range of 50–75 cents per share.

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted -69.78% due to these changes.

VGM Scores

At this time, Qorvo has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Qorvo has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.