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Why Is NXP (NXPI) Down 9.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for NXP Semiconductors (NXPI - Free Report) . Shares have lost about 9.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is NXP due for a breakout? 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 drivers.
NXP Q2 Earnings & Revenues Surpass Estimates
NXP Semiconductors delivered second-quarter 2023 non-GAAP earnings of $3.43 per share, which outpaced the Zacks Consensus Estimate by 4.9%. The figure decreased by 27.6% year over year.
Revenues of $3.3 billion surpassed the Zacks Consensus Estimate of $3.2 billion. The figure was down 0.4% from the year-ago level.
This was attributed to sluggishness in the Industrial & IoT and Mobile end markets during the reported quarter.
The company witnessed strong momentum in the Automotive and Communication Infrastructure & Others markets.
End-Market Detail
Automotive generated $1.87 billion in revenues (56.6% of total revenues), reflecting a year-over-year increase of 9%, driven by innovation in system solutions. The figure surpassed the Zacks Consensus Estimate of $1.86 billion.
Revenues from Industrial & IoT were $578 million (17.5% of total revenues), down 19% from the prior-year quarter’s level. The reported figure came ahead of the consensus mark of $534 million.
Revenues from Mobile were $284 million (8.6% of total revenues), down 27% from the year-ago period’s level. The figure beat the Zacks Consensus Estimate of $261 million.
Communication Infrastructure & Others generated $571 million in revenues (17.3% of total revenues), up 15% year over year. The new cellular standards contributed well to segmental growth. The reported figure surpassed the consensus mark of $548 million.
Operating Results
The non-GAAP gross margin was 58.4%, which expanded 60 basis points (bps) from the year-ago quarter’s level.
Research and development (R&D) expenses were $589 million, up 8.7% year over year. Selling, general and administrative (SG&A) expenses increased by 3.4% year over year to $274 million. As a percentage of revenues, R&D expenses expanded 140 bps year over year to 17.8% and SG&A expenses expanded 30 bps year over year to 8.3%.
The non-GAAP operating margin of 35% for the reported quarter contracted 100 bps from the prior-year period’s figure.
Balance Sheet & Cash Flow
As of Jul 2, 2023, the cash and cash equivalent balance was $3.86 billion, down from $3.93 million as of Apr 2, 2023.
Inventories were $2.11 billion at the end of the second quarter of 2023, up from $1.98 billion at the end of the first quarter of 2023. Accounts receivables were $1.061 billion compared with $1.063 billion in the previous quarter.
Long-term debt was $10.171 billion at the end of the quarter under review compared with $10.169 billion at the end of the last reported quarter.
NXPI generated a cash flow of $756 million in the second quarter of 2023, up from $632 million in the previous quarter.
The company’s capex investment stood at $200 million in the reported quarter. NXPI generated a free cash flow of $556 million in the quarter.
During the second quarter, the company made dividend payments of $264 million and repurchased shares worth $302 million.
Guidance
For third-quarter 2023, NXP Semiconductors expects revenues of $3.3-$3.5 billion, suggesting a decline of 1% at the midpoint, year over year.
It expects a non-GAAP gross margin between 57.9% and 58.9%. The non-GAAP operating margin is anticipated to be between 34.4% and 36.2%.
The company anticipates non-GAAP earnings within the range of $3.39-$3.82 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 8.76% due to these changes.
VGM Scores
At this time, NXP has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, 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 D. 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, NXP 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 NXP (NXPI) Down 9.2% Since Last Earnings Report?
It has been about a month since the last earnings report for NXP Semiconductors (NXPI - Free Report) . Shares have lost about 9.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is NXP due for a breakout? 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 drivers.
NXP Q2 Earnings & Revenues Surpass Estimates
NXP Semiconductors delivered second-quarter 2023 non-GAAP earnings of $3.43 per share, which outpaced the Zacks Consensus Estimate by 4.9%. The figure decreased by 27.6% year over year.
Revenues of $3.3 billion surpassed the Zacks Consensus Estimate of $3.2 billion. The figure was down 0.4% from the year-ago level.
This was attributed to sluggishness in the Industrial & IoT and Mobile end markets during the reported quarter.
The company witnessed strong momentum in the Automotive and Communication Infrastructure & Others markets.
End-Market Detail
Automotive generated $1.87 billion in revenues (56.6% of total revenues), reflecting a year-over-year increase of 9%, driven by innovation in system solutions. The figure surpassed the Zacks Consensus Estimate of $1.86 billion.
Revenues from Industrial & IoT were $578 million (17.5% of total revenues), down 19% from the prior-year quarter’s level. The reported figure came ahead of the consensus mark of $534 million.
Revenues from Mobile were $284 million (8.6% of total revenues), down 27% from the year-ago period’s level. The figure beat the Zacks Consensus Estimate of $261 million.
Communication Infrastructure & Others generated $571 million in revenues (17.3% of total revenues), up 15% year over year. The new cellular standards contributed well to segmental growth. The reported figure surpassed the consensus mark of $548 million.
Operating Results
The non-GAAP gross margin was 58.4%, which expanded 60 basis points (bps) from the year-ago quarter’s level.
Research and development (R&D) expenses were $589 million, up 8.7% year over year. Selling, general and administrative (SG&A) expenses increased by 3.4% year over year to $274 million. As a percentage of revenues, R&D expenses expanded 140 bps year over year to 17.8% and SG&A expenses expanded 30 bps year over year to 8.3%.
The non-GAAP operating margin of 35% for the reported quarter contracted 100 bps from the prior-year period’s figure.
Balance Sheet & Cash Flow
As of Jul 2, 2023, the cash and cash equivalent balance was $3.86 billion, down from $3.93 million as of Apr 2, 2023.
Inventories were $2.11 billion at the end of the second quarter of 2023, up from $1.98 billion at the end of the first quarter of 2023. Accounts receivables were $1.061 billion compared with $1.063 billion in the previous quarter.
Long-term debt was $10.171 billion at the end of the quarter under review compared with $10.169 billion at the end of the last reported quarter.
NXPI generated a cash flow of $756 million in the second quarter of 2023, up from $632 million in the previous quarter.
The company’s capex investment stood at $200 million in the reported quarter. NXPI generated a free cash flow of $556 million in the quarter.
During the second quarter, the company made dividend payments of $264 million and repurchased shares worth $302 million.
Guidance
For third-quarter 2023, NXP Semiconductors expects revenues of $3.3-$3.5 billion, suggesting a decline of 1% at the midpoint, year over year.
It expects a non-GAAP gross margin between 57.9% and 58.9%. The non-GAAP operating margin is anticipated to be between 34.4% and 36.2%.
The company anticipates non-GAAP earnings within the range of $3.39-$3.82 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 8.76% due to these changes.
VGM Scores
At this time, NXP has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, 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 D. 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, NXP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.