Lam Research Corporation ((LRCX - Free Report) ) reported fourth-quarter fiscal 2019 non-GAAP earnings of $3.62 per share, which beat the Zacks Consensus Estimate by 22 cents. However, the figure decreased 2.2% sequentially and 2.2% year over year.
Moreover, adjusted revenues decreased 3.2% sequentially and 24.5% year over year to $2.36 billion. However, the reported revenues surpassed the Zacks Consensus Estimate by 0.47%.
Management remains positive about both etch and deposition technologies, which in turn will continue to expand its presence in the serviceable addressable market. However, weak memory market and lower WFE spending will remain concerns.
Shares of Lam Research have gained 13% in the past 12 months compared with its industry’s 9.9% growth.
Top Line in Detail
In the quarter, China, Korea, Taiwan and the United States accounted for 33%, 25%, 14% and 11%of the company’s total fiscal fourth-quarter revenues, respectively. On the contrary, Japan, Southeast Asia and Europe accounted for 9%, 5% and 3%, respectively.
Lam Research Corporation Price, Consensus and EPS Surprise
Non-GAAP gross margin came in at 45.9%, which expanded 80 basis points (bps) sequentially.
Non-GAAP operating expenses were $450.2 million, reflecting a decrease of 7.8% sequentially. As a percentage of sales, both research & development, and selling, general & administrative expenses marked an increase.
Adjusted operating margin was 26.9%, up 180 bps sequentially. The increase was primarily due to lower expenses.
Balance Sheet & Cash Flow
At the end of the fiscal fourth quarter, cash and cash equivalents, and short-term investments decreased to $5.4 billion from $6.1 billion in the fiscal third quarter.
Cash flow from operating activities was $880.5 million, down from $932.8 million in the fiscal third quarter. Capital expenditures were $65.9 million, down from $75.5 million in the fiscal third quarter.
During the quarter, Lam Research paid dividends of $164.9 million.
For first-quarter fiscal 2020, Lam Research projects revenues to be $2.15 billion (+/- $150 million). The Zacks Consensus Estimate for the same is pegged at $2.28 billion.
Gross margin is projected at around 45% (+/-1%) and operating margin is expected to be 24.5% (+/-1%).
Non-GAAP earnings are projected at $3.00 (+/- 20 cents) per share on a share count of nearly 150 million. The Zacks Consensus Estimate for non-GAAP earnings per share is pegged at $3.23.
Zacks Rank & Stocks to Consider
Currently, Lam Research carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Alibaba Group Holding Limited (BABA - Free Report) , Teradyne, Inc. (TER - Free Report) and eBay Inc. (EBAY - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for Alibaba, Teradyne and eBay is currently projected at 26.8%, 11.4% and 9.4%, respectively.
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