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Why Is Semtech (SMTC) Up 5.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Semtech (SMTC - Free Report) . Shares have added about 5.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Semtech 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 catalysts.
Semtech Q3 Earnings Beat Estimates
Semtech Corporation third-quarter fiscal 2024 non-GAAP earnings of 2 cents per share compares favorably with the Zacks Consensus Estimate for a loss of 15 cents per share. However, the metric decreased by 96.9% year over year.
Net sales of $200.89 million came below the Zacks Consensus Estimate of $200.93 million. The figure increased by 13.1% from the prior-year quarter’s level.
Top-line growth was driven by the company’s strength in IoT System Products Group. Solid momentum across the industrial end-market contributed well. The improving consumer market was a plus.
Softness in the Signal Integrity product line was a major concern. Weak momentum across the infrastructure market was a headwind.
Revenues by End Market
Sales from the infrastructure market were $43.2 million (21% of net sales), exhibiting a decline of 38.7% year over year.
Sales from the industrial market were $120.2 million (60% of net sales), up 65.8% from the prior-year period’s level.
Sales from the high-end consumer market were $37.6 million (19% of net sales), improving 8.3% year over year.
Revenues by Product Lines
Signal Integrity (24% of net sales) sales were $48.74 million in the reported quarter, down 36.5% year over year. The figure came below the consensus mark of $53 million.
Advanced Sensing and Protection (25% of net sales) sales were $50.6 million, down 1.3% from the prior-year quarter. The figure came above the consensus mark of $42.9 million.
IoT System (39% of net sales) sales were $77.4 million, increasing 55.7% on a year-over-year basis. The figure lagged the Zacks Consensus Estimate of $91 million.
IoT Connected Services (12% of net sales) sales were $24.2 million in the reported quarter. The figure surpassed the Zacks Consensus Estimate of $12.09 million.
Operating Results
Non-GAAP gross margin of 49.6% contracted from 65.5% reported in the year-ago quarter.
Adjusted selling, general and administrative expenses for the fiscal third quarter increased 6% to $38.6 million from the last fiscal year’s quarterly number.
Adjusted product development and engineering expenses increased 38.9% from the year-ago quarter to $43.9 million.
The non-GAAP operating margin of 10.2% contracted significantly from the 27.2% reported in the last fiscal year quarter.
Balance Sheet and Cash Flow
As of Oct 29, 2023, cash and cash equivalents were $123.8 million, down from $147.9 million as of Jul 30, 2023.
Account receivables for third-quarter fiscal 2024 were $156.6 million, down from $159.1 million in second-quarter fiscal 2024.
Long-term debt was $1.37 billion compared with $1.33 billion in the previous fiscal quarter.
In the reported fiscal quarter, the company used $5.8 million of cash in operations compared with $12 million in the previous quarter. Free cash flow in the fiscal third quarter was an outflow of $12.4 million.
Guidance
For fourth-quarter fiscal 2024, management expects net sales of $180-$200 million.
The non-GAAP gross margin is expected to be 48% (+/- 100 bps). Non-GAAP operating margin is anticipated to be 9.1% (+/- 200 bps).
The non-GAAP-based loss is expected in the band of 5 cents per share (+/- 6 cents).
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 30% due to these changes.
VGM Scores
At this time, Semtech has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile 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 indicates a downward shift. Notably, Semtech 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 Semtech (SMTC) Up 5.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Semtech (SMTC - Free Report) . Shares have added about 5.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Semtech 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 catalysts.
Semtech Q3 Earnings Beat Estimates
Semtech Corporation third-quarter fiscal 2024 non-GAAP earnings of 2 cents per share compares favorably with the Zacks Consensus Estimate for a loss of 15 cents per share. However, the metric decreased by 96.9% year over year.
Net sales of $200.89 million came below the Zacks Consensus Estimate of $200.93 million. The figure increased by 13.1% from the prior-year quarter’s level.
Top-line growth was driven by the company’s strength in IoT System Products Group. Solid momentum across the industrial end-market contributed well. The improving consumer market was a plus.
Softness in the Signal Integrity product line was a major concern. Weak momentum across the infrastructure market was a headwind.
Revenues by End Market
Sales from the infrastructure market were $43.2 million (21% of net sales), exhibiting a decline of 38.7% year over year.
Sales from the industrial market were $120.2 million (60% of net sales), up 65.8% from the prior-year period’s level.
Sales from the high-end consumer market were $37.6 million (19% of net sales), improving 8.3% year over year.
Revenues by Product Lines
Signal Integrity (24% of net sales) sales were $48.74 million in the reported quarter, down 36.5% year over year. The figure came below the consensus mark of $53 million.
Advanced Sensing and Protection (25% of net sales) sales were $50.6 million, down 1.3% from the prior-year quarter. The figure came above the consensus mark of $42.9 million.
IoT System (39% of net sales) sales were $77.4 million, increasing 55.7% on a year-over-year basis. The figure lagged the Zacks Consensus Estimate of $91 million.
IoT Connected Services (12% of net sales) sales were $24.2 million in the reported quarter. The figure surpassed the Zacks Consensus Estimate of $12.09 million.
Operating Results
Non-GAAP gross margin of 49.6% contracted from 65.5% reported in the year-ago quarter.
Adjusted selling, general and administrative expenses for the fiscal third quarter increased 6% to $38.6 million from the last fiscal year’s quarterly number.
Adjusted product development and engineering expenses increased 38.9% from the year-ago quarter to $43.9 million.
The non-GAAP operating margin of 10.2% contracted significantly from the 27.2% reported in the last fiscal year quarter.
Balance Sheet and Cash Flow
As of Oct 29, 2023, cash and cash equivalents were $123.8 million, down from $147.9 million as of Jul 30, 2023.
Account receivables for third-quarter fiscal 2024 were $156.6 million, down from $159.1 million in second-quarter fiscal 2024.
Long-term debt was $1.37 billion compared with $1.33 billion in the previous fiscal quarter.
In the reported fiscal quarter, the company used $5.8 million of cash in operations compared with $12 million in the previous quarter. Free cash flow in the fiscal third quarter was an outflow of $12.4 million.
Guidance
For fourth-quarter fiscal 2024, management expects net sales of $180-$200 million.
The non-GAAP gross margin is expected to be 48% (+/- 100 bps). Non-GAAP operating margin is anticipated to be 9.1% (+/- 200 bps).
The non-GAAP-based loss is expected in the band of 5 cents per share (+/- 6 cents).
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 30% due to these changes.
VGM Scores
At this time, Semtech has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile 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 indicates a downward shift. Notably, Semtech has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.