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Why Is Lam Research (LRCX) Down 5.5% Since its Last Earnings Report?
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It has been about a month since the last earnings report for Lam Research Corporation (LRCX - Free Report) . Shares have lost about 5.5% in the past month, underperforming the market.
Will the recent negative trend continue leading up to its next earnings release, or is LRCX due for a breakout? 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.
Lam Research Tops Q1 Earnings & Revenue Estimates
Lam Research reported first-quarter fiscal 2018 non-GAAP earnings of $3.46 per share, surpassing the Zacks Consensus Estimate of $3.27. Earnings increased 11.3% sequentially and 91.2% year over year.
Revenues
Revenues of $2.48 billion increased 5.7% sequentially and 31.7% year over year. Also, revenues came in above the Zacks Consensus Estimate of $2.46 billion.
Revenues by Geography
Region wise, Korea contributed 38%, Japan accounted for 20% and Taiwan and China generated 14% each of first-quarter revenues. The United States, Southeast Asia and Europe generated 6%, 5% and 3%, respectively.
Shipments
Total system shipments were $2.38 billion during the reported quarter, down 6.3% from $2.54 billion reported last quarter. However, shipments were above the Zacks Consensus Estimate of $2.35 billion.
Martin Anstice, president and chief executive officer of Lam Research, expects strong shipments growth in the calendar year of 2017.
Margins
Non-GAAP gross profit was $1.17 billion or 47.2% of revenues, reflecting an increase of 70 bps sequentially.
Total adjusted operating expenses were $438.1 million, reflecting an increase of 0.5% sequentially. Operating margin was 29.6%, increasing 190 bps from the prior quarter.
Net Income
GAAP net income was $590.7 million compared with $526.4 million in the last quarter and $263.8 million in the year-ago quarter.
Non-GAAP net income was $627.8 million compared with $565.5 million in the last quarter.
Balance Sheet
Exiting first-quarter fiscal 2018, cash and cash equivalents, short-term investments, and restricted cash and investment balances were $6.2 billion compared with $6.04 billion at the end of fourth-quarter fiscal 2017.
Cash flow from operating activities was $858.0 million against $729.2 million in the previous quarter. Capital expenditures amounted to $60.0 million. The company paid $73.0 million in cash dividends and spent approximately $155.0 million on share repurchases.
Guidance
Lam Research provided guidance for second-quarter fiscal 2018.
On a non-GAAP basis, the company expects revenues of approximately $2.55 billion (+/- $100 million). The Zacks Consensus Estimate is pegged at $2.56 billion. Shipments are projected to be roughly $2.60 billion (+/- $100 million). Gross margin is predicted at around 47.5% (+/-1%), while operating margin is likely to be about 30% (+/-1%).
Earnings per share are projected at $3.65 (+/- 12 cents) on a share count of nearly 182 million. The Zacks Consensus Estimate is pegged at $3.67 per share, which makes guidance better than expected. GAAP earnings per share are projected at $3.40 (+/- 12 cents).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter, while looking back an additional 30 days, we can see even more upward momentum.
At this time, LRCX has a subpar Growth Score of D, though it is lagging a bit on the momentum front with an F. However, the stock was also allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our style scores.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise LRCX has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Lam Research (LRCX) Down 5.5% Since its Last Earnings Report?
It has been about a month since the last earnings report for Lam Research Corporation (LRCX - Free Report) . Shares have lost about 5.5% in the past month, underperforming the market.
Will the recent negative trend continue leading up to its next earnings release, or is LRCX due for a breakout? 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.
Lam Research Tops Q1 Earnings & Revenue Estimates
Lam Research reported first-quarter fiscal 2018 non-GAAP earnings of $3.46 per share, surpassing the Zacks Consensus Estimate of $3.27. Earnings increased 11.3% sequentially and 91.2% year over year.
Revenues
Revenues of $2.48 billion increased 5.7% sequentially and 31.7% year over year. Also, revenues came in above the Zacks Consensus Estimate of $2.46 billion.
Revenues by Geography
Region wise, Korea contributed 38%, Japan accounted for 20% and Taiwan and China generated 14% each of first-quarter revenues. The United States, Southeast Asia and Europe generated 6%, 5% and 3%, respectively.
Shipments
Total system shipments were $2.38 billion during the reported quarter, down 6.3% from $2.54 billion reported last quarter. However, shipments were above the Zacks Consensus Estimate of $2.35 billion.
Martin Anstice, president and chief executive officer of Lam Research, expects strong shipments growth in the calendar year of 2017.
Margins
Non-GAAP gross profit was $1.17 billion or 47.2% of revenues, reflecting an increase of 70 bps sequentially.
Total adjusted operating expenses were $438.1 million, reflecting an increase of 0.5% sequentially. Operating margin was 29.6%, increasing 190 bps from the prior quarter.
Net Income
GAAP net income was $590.7 million compared with $526.4 million in the last quarter and $263.8 million in the year-ago quarter.
Non-GAAP net income was $627.8 million compared with $565.5 million in the last quarter.
Balance Sheet
Exiting first-quarter fiscal 2018, cash and cash equivalents, short-term investments, and restricted cash and investment balances were $6.2 billion compared with $6.04 billion at the end of fourth-quarter fiscal 2017.
Cash flow from operating activities was $858.0 million against $729.2 million in the previous quarter. Capital expenditures amounted to $60.0 million. The company paid $73.0 million in cash dividends and spent approximately $155.0 million on share repurchases.
Guidance
Lam Research provided guidance for second-quarter fiscal 2018.
On a non-GAAP basis, the company expects revenues of approximately $2.55 billion (+/- $100 million). The Zacks Consensus Estimate is pegged at $2.56 billion. Shipments are projected to be roughly $2.60 billion (+/- $100 million). Gross margin is predicted at around 47.5% (+/-1%), while operating margin is likely to be about 30% (+/-1%).
Earnings per share are projected at $3.65 (+/- 12 cents) on a share count of nearly 182 million. The Zacks Consensus Estimate is pegged at $3.67 per share, which makes guidance better than expected. GAAP earnings per share are projected at $3.40 (+/- 12 cents).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter, while looking back an additional 30 days, we can see even more upward momentum.
Lam Research Corporation Price and Consensus
Lam Research Corporation Price and Consensus | Lam Research Corporation Quote
VGM Scores
At this time, LRCX has a subpar Growth Score of D, though it is lagging a bit on the momentum front with an F. However, the stock was also allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our style scores.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise LRCX has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.