It has been about a month since the last earnings report for FormFactor (
FORM Quick Quote FORM - Free Report) . Shares have added about 19.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is FormFactor 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.
FormFactor Q1 Earnings Beat, Revenues Fall Y/Y
FormFactor reported first-quarter 2023 adjusted earnings of 16 cents per share, which surpassed the Zacks Consensus Estimate by 23.1%. However, the bottom line decreased 67.3% year over year.
Revenues of $167.4 million surpassed the Zacks Consensus Estimate of $162.2 million. However, the figure declined 15.1% on a year-over-year basis. Weak demand in DRAM and Flash acted as an offset. Further, softness in Foundry & Logic was a concern. Nevertheless, strength in Systems was a positive. Segments in Detail
Probe card: Revenues from this segment were $127.3 million for the first quarter, down 20.4% year over year.
Foundry & Logic’s (accounting for 60.7% of revenues) revenues were $101.6 million, down 11% year over year. Revenues for DRAM products (11.8% of revenues) were $19.8 million, reflecting a decrease of 42.6% year over year. Flash revenues (3.5% of revenues) were $5.9 million, down 48.2% from the year-ago period’s level. Systems: Revenues from this segment were $40.1 million (24% of revenues), up 7.8% year over year. Regional Details
Revenues generated from the United States, Europe, Singapore, and the Rest of World were $37.7 million, $9.4 million, $5.3 million and $4.5 million, respectively. Revenues in the United States, Europe and the Rest of World increased 47.3%, 11.9% and 164.7%, respectively while revenues in Singapore decreased 51.4% year over year.
Revenues generated from Taiwan, China, South Korea, Malaysia and Japan were $40.3 million, $27.1 million, $20.8 million, $11.3 million and $11 million, respectively. Revenues from Taiwan, China, South Korea, and Malaysia were down 24.1%, 29.4%, 24.4% and 49.1%, respectively, year over year. Revenues from Japan were up 17% from the year-ago quarter. Operating Results
On a non-GAAP basis, the gross margin contracted significantly from 49% in the year-ago quarter to 38.4% in the reported quarter.
Non-GAAP operating expenses decreased 1.4% year over year to $51.2 million. As a percentage of revenues, the metric expanded 430 basis points (bps) year over year to 30.6%. Non-GAAP operating margin was 7.9%, which contracted significantly from 22.7% in the year-ago quarter. Balance Sheet & Cash Flow
As of Apr 1, 2023, cash and cash equivalents and marketable securities were $236.3 million compared with $238.1 million on Dec 31, 2022.
Cash generated from operating activities was $12.3 million for the reported quarter, down from $44.2 million in the previous quarter. Capital expenditure was $19.7 million in the first quarter. Free cash flow was an outflow of $7.3 million. Guidance
FormFactor expects second-quarter 2023 revenues of $162 million (+/- $5 million).
Management expects a non-GAAP gross margin of 38% (+/- 1.5%). On a non-GAAP basis, it projects earnings of 12 cents (+/- 4 cents) per share. For the second quarter, the Systems business is anticipated to witness record revenues. How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -46.43% due to these changes.
At this time, FormFactor has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, FormFactor has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
FormFactor belongs to the Zacks Electronics - Semiconductors industry. Another stock from the same industry, Advanced Micro Devices (
AMD Quick Quote AMD - Free Report) , has gained 37.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Advanced Micro reported revenues of $5.35 billion in the last reported quarter, representing a year-over-year change of -9.1%. EPS of $0.60 for the same period compares with $1.13 a year ago.
For the current quarter, Advanced Micro is expected to post earnings of $0.57 per share, indicating a change of -45.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -8.5% over the last 30 days.
Advanced Micro has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.