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Why Is FormFactor (FORM) Up 18.5% Since Last Earnings Report?
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A month has gone by since the last earnings report for FormFactor (FORM - Free Report) . Shares have added about 18.5% 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 its most recent earnings report in order to get a better handle on the important drivers.
FormFactor delivered fourth-quarter 2023 adjusted earnings of 20 cents per share, in line with the Zacks Consensus Estimate. The bottom-line figure increased by 15 cents from the year-ago quarter’s levels.
Revenues of $168.2 million beat the Zacks Consensus Estimate by 1.62% and increased 1.3% on a year-over-year basis. The top-line growth can primarily be attributed to growth in probe cards.
Formfactor’s success can also be attributed to advanced packaging applications like chiplets and tiles, high-bandwidth memory and co-packaged optics.
Segments in Detail
Probe card revenues were $127 million, up 2.1% year over year.
Foundry & Logic (accounting for 49.8% of revenues) revenues were $83.8 million, up 2.1% year over year.
The adoption of advanced packaging processes by major foundry and logic customers contributed to higher test intensity and complexity, positively impacting the foundry and logic probe card market.
DRAM revenues (21.3% of revenues) were $35.9 million, up 31.5% year over year. The upside was driven by the introduction of new DDR5 DRAM designs and the rising demand for probe cards used in testing high-bandwidth memory (HBM), a key enabler supporting the advancement of generative AI.
Flash revenues (4.3% of revenues) were $7.3 million, down 51.3% year over year.
Systems revenues (24.5% of revenues) were $41.2 million, down 1% year over year. The reduction in the system revenues was mainly due to the divestiture of the FRT metrology business.
FormFactor's Systems business maintained momentum driven by strong demand for test and measurement solutions in emerging fields such as co-packaged silicon photonics and quantum computing.
Regionally, revenues generated from the United States, Taiwan and South Korea increased 45.4%, 17.1% and 29.8% year over year, respectively.
Revenues generated from China, Europe, Japan, Malaysia, Singapore and the Rest of World were down 45.8%, 15.5%, 4.4%, 47.1%, 40.9% and 3.6%, respectively, year over year.
Operating Results
In fourth-quarter 2023, gross margin increased 1030 basis points (bps) year over year to 42.1% in the reported quarter.
Non-GAAP operating expenses increased 7.8% year over year to $51.6 million. As a percentage of revenues, operating expenses were 180 bps year over year to 30.7%.
The non-GAAP operating margin increased 850 bps year over year to 11.4%.
Balance Sheet & Cash Flow
As of Dec 30, 2023, cash and cash equivalents and marketable securities were $328.3 million compared with $244.4 million on Sep 30, 2023.
Cash generated from operating activities was $9.25 million for the reported quarter, down from $20.6 million in the previous quarter.
Free cash outflow was $310,000 for the reported quarter, down from $16.9 million reported in the previous quarter.
Guidance
FormFactor expects first-quarter 2024 revenues of $165 million (+/- $5 million).
The company expects a non-GAAP gross margin of 41% (+/- 1.5%).
On a non-GAAP basis, FormFactor expects earnings of 19 cents (+/- 4 cents) per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -9.23% due to these changes.
VGM Scores
Currently, FormFactor has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Following the exact same course, 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 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 is part of the Zacks Electronics - Semiconductors industry. Over the past month, Infineon Technologies AG (IFNNY - Free Report) , a stock from the same industry, has gained 7.3%. The company reported its results for the quarter ended December 2023 more than a month ago.
Infineon Technologies AG reported revenues of $3.99 billion in the last reported quarter, representing a year-over-year change of -1.2%. EPS of $0.57 for the same period compares with $0.65 a year ago.
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Why Is FormFactor (FORM) Up 18.5% Since Last Earnings Report?
A month has gone by since the last earnings report for FormFactor (FORM - Free Report) . Shares have added about 18.5% 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 its most recent earnings report in order to get a better handle on the important drivers.
FormFactor Q4 Earnings Meet Estimates, Revenues Rise
FormFactor delivered fourth-quarter 2023 adjusted earnings of 20 cents per share, in line with the Zacks Consensus Estimate. The bottom-line figure increased by 15 cents from the year-ago quarter’s levels.
Revenues of $168.2 million beat the Zacks Consensus Estimate by 1.62% and increased 1.3% on a year-over-year basis. The top-line growth can primarily be attributed to growth in probe cards.
Formfactor’s success can also be attributed to advanced packaging applications like chiplets and tiles, high-bandwidth memory and co-packaged optics.
Segments in Detail
Probe card revenues were $127 million, up 2.1% year over year.
Foundry & Logic (accounting for 49.8% of revenues) revenues were $83.8 million, up 2.1% year over year.
The adoption of advanced packaging processes by major foundry and logic customers contributed to higher test intensity and complexity, positively impacting the foundry and logic probe card market.
DRAM revenues (21.3% of revenues) were $35.9 million, up 31.5% year over year. The upside was driven by the introduction of new DDR5 DRAM designs and the rising demand for probe cards used in testing high-bandwidth memory (HBM), a key enabler supporting the advancement of generative AI.
Flash revenues (4.3% of revenues) were $7.3 million, down 51.3% year over year.
Systems revenues (24.5% of revenues) were $41.2 million, down 1% year over year. The reduction in the system revenues was mainly due to the divestiture of the FRT metrology business.
FormFactor's Systems business maintained momentum driven by strong demand for test and measurement solutions in emerging fields such as co-packaged silicon photonics and quantum computing.
Regionally, revenues generated from the United States, Taiwan and South Korea increased 45.4%, 17.1% and 29.8% year over year, respectively.
Revenues generated from China, Europe, Japan, Malaysia, Singapore and the Rest of World were down 45.8%, 15.5%, 4.4%, 47.1%, 40.9% and 3.6%, respectively, year over year.
Operating Results
In fourth-quarter 2023, gross margin increased 1030 basis points (bps) year over year to 42.1% in the reported quarter.
Non-GAAP operating expenses increased 7.8% year over year to $51.6 million. As a percentage of revenues, operating expenses were 180 bps year over year to 30.7%.
The non-GAAP operating margin increased 850 bps year over year to 11.4%.
Balance Sheet & Cash Flow
As of Dec 30, 2023, cash and cash equivalents and marketable securities were $328.3 million compared with $244.4 million on Sep 30, 2023.
Cash generated from operating activities was $9.25 million for the reported quarter, down from $20.6 million in the previous quarter.
Free cash outflow was $310,000 for the reported quarter, down from $16.9 million reported in the previous quarter.
Guidance
FormFactor expects first-quarter 2024 revenues of $165 million (+/- $5 million).
The company expects a non-GAAP gross margin of 41% (+/- 1.5%).
On a non-GAAP basis, FormFactor expects earnings of 19 cents (+/- 4 cents) per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -9.23% due to these changes.
VGM Scores
Currently, FormFactor has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Following the exact same course, 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 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 is part of the Zacks Electronics - Semiconductors industry. Over the past month, Infineon Technologies AG (IFNNY - Free Report) , a stock from the same industry, has gained 7.3%. The company reported its results for the quarter ended December 2023 more than a month ago.
Infineon Technologies AG reported revenues of $3.99 billion in the last reported quarter, representing a year-over-year change of -1.2%. EPS of $0.57 for the same period compares with $0.65 a year ago.