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Qorvo (QRVO) Up 8.3% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Qorvo (QRVO - Free Report) . Shares have added about 8.3% 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 Q3 Earnings Beat Estimates on Higher Revenues
Qorvo reported strong third-quarter fiscal 2024 results, with the bottom and the top line beating the respective Zacks Consensus Estimate. The company reported top-line expansion year over year, backed by solid demand trends in multiple end markets, including defense, aerospace, power management, WIFI, smartphone and automotive. However, weakness in the cellular base station market partially impeded this positive trend.
Net Income
On a GAAP basis, the company reported a net loss of $126.9 million or a loss of $1.31 per share compared with a net loss of $15.9 million or a loss of 16 cents per share in the prior-year quarter. Despite revenue growth, increase in operating expenses led to greater loss.
Non-GAAP net income was $205.9 million or $2.10 per share, up from $76.5 million or 75 cents per share in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimates by 45 cents.
Revenues
Net sales during the quarter rose to $1.07 billion from $743.3 million in the prior-year quarter. Solid sales growth in Connectivity and Sensors Group (CSG) and Advance Cellular Group (ACG) business supported the revenue growth during the quarter. The company secured major deal wins for its ultra-wideband applications, including an in-vehicle car access platform and a flagship Android smartphone during the quarter. The top line beat the Zacks Consensus Estimate of $1 billion.
High-Performance Analog contributed $118.9 million in revenues, down from $155 million in the year-ago quarter. Net sales fell short of the Zacks Consensus Estimate of $142.7 million. Inventory corrections in Cellular base station markets affected the top line in this segment. However, Qorvo is witnessing signs of market recovery in several end markets. The company secured new product orders for several large domestic and international ground-based radar systems. The transition from legacy mechanical systems to active electronics scanning systems is driving growth in the defense and aerospace business.
In power management, the company continues to boast a strong presence in the consumer electronic sector. Healthy traction in automotive also cushioned the top line. Growing demand for DOCSIS 4.0 hybrid power doublers is supporting growth in the infrastructure business.
Revenues from CSG were $108.9 million compared with $96.8 million in the year-earlier quarter. The top line marginally beat the Zacks Consensus Estimate of $107.8 million. The improvement is driven by the growing adoption of WIFI 7 across operator, retail, enterprise and mobile segments. Demand for WIFI 6 has remained strong in India. Solid ultra-wideband demand across various end markets, including automotive, laptop trackpads, wearables and smartphones, also supported the top line in this segment.
Net sales in ACG were $846.1 million, up 72.1% year over year. Rising shipments of Qorvo components in support of the spring 2024 flagship smartphone launch by a leading Android smartphone maker boosted the revenue from this segment. The top line beat the Zacks Consensus Estimate of $754.06 million.
Other Details
Non-GAAP gross profit rose to $470.5 million from $304.2 million, with respective margins of 43.8% and 40.9%. Non-GAAP operating expenses increased to $234 million from $205.7 million a year ago, owing to higher investments in new product development. Non-GAAP operating income stood at $236.5 million, up from $98.6 million in the year-ago quarter.
Cash Flow & Liquidity
As of Dec 30, 2023, QRVO had $1.07 billion in cash and cash equivalents with $1.55 billion of long-term debt. The company generated $492.9 million in net cash from operating activities, with a free cash flow of $466.5 million. Qorvo repurchased $100 million worth of shares at an average price of $94 in the quarter.
Outlook
For fourth-quarter fiscal 2024, the company expects revenues at about $925 million (+/- $25 million). Non-GAAP gross margin is projected at 42%. Non-GAAP earnings per share are likely to be $1.20 at the midpoint of the revenue guidance. The company expects non-GAAP operating expenses to be $245 million in the March quarter.
Qorvo expects soft demand trends will persist throughout fiscal 2024 in the cellular base station market. However, signs of a rebound in the SSDs and PC market are expected to boost net sales in the power management portfolio. Management is also undertaking various productivity enhancement initiatives across enterprise to boost profitability.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
The consensus estimate has shifted 6.44% due to these changes.
VGM Scores
Currently, Qorvo has a great Growth Score of A, 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
Qorvo has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Qorvo belongs to the Zacks Semiconductors - Radio Frequency industry. Another stock from the same industry, Skyworks Solutions (SWKS - Free Report) , has gained 1.9% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Skyworks reported revenues of $1.2 billion in the last reported quarter, representing a year-over-year change of -9.6%. EPS of $1.97 for the same period compares with $2.59 a year ago.
Skyworks is expected to post earnings of $1.52 per share for the current quarter, representing a year-over-year change of -24.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.6%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Skyworks. Also, the stock has a VGM Score of B.
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Qorvo (QRVO) Up 8.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Qorvo (QRVO - Free Report) . Shares have added about 8.3% 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 Q3 Earnings Beat Estimates on Higher Revenues
Qorvo reported strong third-quarter fiscal 2024 results, with the bottom and the top line beating the respective Zacks Consensus Estimate. The company reported top-line expansion year over year, backed by solid demand trends in multiple end markets, including defense, aerospace, power management, WIFI, smartphone and automotive. However, weakness in the cellular base station market partially impeded this positive trend.
Net Income
On a GAAP basis, the company reported a net loss of $126.9 million or a loss of $1.31 per share compared with a net loss of $15.9 million or a loss of 16 cents per share in the prior-year quarter. Despite revenue growth, increase in operating expenses led to greater loss.
Non-GAAP net income was $205.9 million or $2.10 per share, up from $76.5 million or 75 cents per share in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimates by 45 cents.
Revenues
Net sales during the quarter rose to $1.07 billion from $743.3 million in the prior-year quarter. Solid sales growth in Connectivity and Sensors Group (CSG) and Advance Cellular Group (ACG) business supported the revenue growth during the quarter. The company secured major deal wins for its ultra-wideband applications, including an in-vehicle car access platform and a flagship Android smartphone during the quarter. The top line beat the Zacks Consensus Estimate of $1 billion.
High-Performance Analog contributed $118.9 million in revenues, down from $155 million in the year-ago quarter. Net sales fell short of the Zacks Consensus Estimate of $142.7 million. Inventory corrections in Cellular base station markets affected the top line in this segment. However, Qorvo is witnessing signs of market recovery in several end markets. The company secured new product orders for several large domestic and international ground-based radar systems. The transition from legacy mechanical systems to active electronics scanning systems is driving growth in the defense and aerospace business.
In power management, the company continues to boast a strong presence in the consumer electronic sector. Healthy traction in automotive also cushioned the top line. Growing demand for DOCSIS 4.0 hybrid power doublers is supporting growth in the infrastructure business.
Revenues from CSG were $108.9 million compared with $96.8 million in the year-earlier quarter. The top line marginally beat the Zacks Consensus Estimate of $107.8 million. The improvement is driven by the growing adoption of WIFI 7 across operator, retail, enterprise and mobile segments. Demand for WIFI 6 has remained strong in India. Solid ultra-wideband demand across various end markets, including automotive, laptop trackpads, wearables and smartphones, also supported the top line in this segment.
Net sales in ACG were $846.1 million, up 72.1% year over year. Rising shipments of Qorvo components in support of the spring 2024 flagship smartphone launch by a leading Android smartphone maker boosted the revenue from this segment. The top line beat the Zacks Consensus Estimate of $754.06 million.
Other Details
Non-GAAP gross profit rose to $470.5 million from $304.2 million, with respective margins of 43.8% and 40.9%. Non-GAAP operating expenses increased to $234 million from $205.7 million a year ago, owing to higher investments in new product development. Non-GAAP operating income stood at $236.5 million, up from $98.6 million in the year-ago quarter.
Cash Flow & Liquidity
As of Dec 30, 2023, QRVO had $1.07 billion in cash and cash equivalents with $1.55 billion of long-term debt. The company generated $492.9 million in net cash from operating activities, with a free cash flow of $466.5 million. Qorvo repurchased $100 million worth of shares at an average price of $94 in the quarter.
Outlook
For fourth-quarter fiscal 2024, the company expects revenues at about $925 million (+/- $25 million). Non-GAAP gross margin is projected at 42%. Non-GAAP earnings per share are likely to be $1.20 at the midpoint of the revenue guidance. The company expects non-GAAP operating expenses to be $245 million in the March quarter.
Qorvo expects soft demand trends will persist throughout fiscal 2024 in the cellular base station market. However, signs of a rebound in the SSDs and PC market are expected to boost net sales in the power management portfolio. Management is also undertaking various productivity enhancement initiatives across enterprise to boost profitability.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
The consensus estimate has shifted 6.44% due to these changes.
VGM Scores
Currently, Qorvo has a great Growth Score of A, 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
Qorvo has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Qorvo belongs to the Zacks Semiconductors - Radio Frequency industry. Another stock from the same industry, Skyworks Solutions (SWKS - Free Report) , has gained 1.9% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Skyworks reported revenues of $1.2 billion in the last reported quarter, representing a year-over-year change of -9.6%. EPS of $1.97 for the same period compares with $2.59 a year ago.
Skyworks is expected to post earnings of $1.52 per share for the current quarter, representing a year-over-year change of -24.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.6%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Skyworks. Also, the stock has a VGM Score of B.