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FormFactor (FORM) Down 0.3% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for FormFactor (FORM - Free Report) . Shares have lost about 0.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is FormFactor 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.
FormFactor Q2 Earnings Beat, Revenues Fall Y/Y
FormFactor delivered second-quarter 2023 adjusted earnings of 14 cents per share, which surpassed the Zacks Consensus Estimate by 16.7%. However, the bottom line decreased by 69.6% year over year.
Revenues of $155.92 million missed the Zacks Consensus Estimate of $162 million. The figure declined by 23.5% on a year-over-year basis.
The top-line decline was primarily attributed to softness in probe cards. Weak demand for DRAM, Flash and Foundry & Logic remained a concern.
Nevertheless, the company witnessed growing momentum in the systems business.
Segments in Detail
Probe card: Revenues from this segment were $115.3 million for the second quarter, down 31.2% year over year.
Foundry & Logic’s (accounting for 52.5% of revenues) revenues were $81.9 million, down 33.1% year over year.
Revenues for DRAM products (19.6% of revenues) were $30.5 million, reflecting a decrease of 17.1% year over year.
Flash’s revenues (1.9% of revenues) were $2.9 million, down 65.9% from the year-ago period’s level.
Systems: Revenues from this segment were $40.6 million (26% of revenues), up 12.1% year over year.
Regional Details
Revenues generated from the United States, Europe, Singapore and the Rest of the World were $42.7 million, $10.8 million, $2.8 million and $4.1 million, respectively. Revenues in the United States, Europe and the Rest of the World improved by 36.8%, 33.3% and 41.4% year over year, respectively. However, revenues in Singapore decreased by 60.6% year over year.
Revenues generated from Taiwan, China, South Korea, Malaysia and Japan were $29.5 million, $23.5 million, $27.9 million, $6.7 million and $7.9 million, respectively. Revenues from Taiwan, China, South Korea, Malaysia and Japan were down 41%, 52.7%, 3.1%, 58.6% and 20.2%, respectively, year over year.
Operating Results
On a non-GAAP basis, gross margin significantly contracted by 680 basis points (bps) year over year to 40.6% in the reported quarter.
Non-GAAP operating expenses decreased 4.4% year over year to $52.1 million. As a percentage of total second-quarter revenues, the metric expanded 670 bps year over year to 33.4%.
Non-GAAP operating margin was 7.2%, which contracted significantly from 20.7% in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jul 1, 2023, cash and cash equivalents and marketable securities were $236.9 million compared with $236.3 million on Apr 1, 2023.
Cash generated from operating activities was $22.5 million for the reported quarter, up from $12.3 million in the previous quarter.
Capital expenditures were $20.5 million in the second quarter. Free cash flow was $2.1 million.
Guidance
FormFactor expects third-quarter 2023 revenues of $167 million (+/- $5 million).
Management expects a non-GAAP gross margin of 40% (+/- 1.5%).
On a non-GAAP basis, it projects earnings of 17 cents (+/- 4 cents) per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 6.67% due to these changes.
VGM Scores
Currently, FormFactor has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. 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.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, FormFactor has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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FormFactor (FORM) Down 0.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for FormFactor (FORM - Free Report) . Shares have lost about 0.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is FormFactor 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.
FormFactor Q2 Earnings Beat, Revenues Fall Y/Y
FormFactor delivered second-quarter 2023 adjusted earnings of 14 cents per share, which surpassed the Zacks Consensus Estimate by 16.7%. However, the bottom line decreased by 69.6% year over year.
Revenues of $155.92 million missed the Zacks Consensus Estimate of $162 million. The figure declined by 23.5% on a year-over-year basis.
The top-line decline was primarily attributed to softness in probe cards. Weak demand for DRAM, Flash and Foundry & Logic remained a concern.
Nevertheless, the company witnessed growing momentum in the systems business.
Segments in Detail
Probe card: Revenues from this segment were $115.3 million for the second quarter, down 31.2% year over year.
Foundry & Logic’s (accounting for 52.5% of revenues) revenues were $81.9 million, down 33.1% year over year.
Revenues for DRAM products (19.6% of revenues) were $30.5 million, reflecting a decrease of 17.1% year over year.
Flash’s revenues (1.9% of revenues) were $2.9 million, down 65.9% from the year-ago period’s level.
Systems: Revenues from this segment were $40.6 million (26% of revenues), up 12.1% year over year.
Regional Details
Revenues generated from the United States, Europe, Singapore and the Rest of the World were $42.7 million, $10.8 million, $2.8 million and $4.1 million, respectively. Revenues in the United States, Europe and the Rest of the World improved by 36.8%, 33.3% and 41.4% year over year, respectively. However, revenues in Singapore decreased by 60.6% year over year.
Revenues generated from Taiwan, China, South Korea, Malaysia and Japan were $29.5 million, $23.5 million, $27.9 million, $6.7 million and $7.9 million, respectively. Revenues from Taiwan, China, South Korea, Malaysia and Japan were down 41%, 52.7%, 3.1%, 58.6% and 20.2%, respectively, year over year.
Operating Results
On a non-GAAP basis, gross margin significantly contracted by 680 basis points (bps) year over year to 40.6% in the reported quarter.
Non-GAAP operating expenses decreased 4.4% year over year to $52.1 million. As a percentage of total second-quarter revenues, the metric expanded 670 bps year over year to 33.4%.
Non-GAAP operating margin was 7.2%, which contracted significantly from 20.7% in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jul 1, 2023, cash and cash equivalents and marketable securities were $236.9 million compared with $236.3 million on Apr 1, 2023.
Cash generated from operating activities was $22.5 million for the reported quarter, up from $12.3 million in the previous quarter.
Capital expenditures were $20.5 million in the second quarter. Free cash flow was $2.1 million.
Guidance
FormFactor expects third-quarter 2023 revenues of $167 million (+/- $5 million).
Management expects a non-GAAP gross margin of 40% (+/- 1.5%).
On a non-GAAP basis, it projects earnings of 17 cents (+/- 4 cents) per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 6.67% due to these changes.
VGM Scores
Currently, FormFactor has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. 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.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, FormFactor has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.