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Lam Research (LRCX) Q2 Earnings & Revenues Beat Estimates
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Lam Research Corporation ((LRCX - Free Report) ) reported second-quarter fiscal 2020 non-GAAP earnings of $4.01 per share, which beat the Zacks Consensus Estimate of $3.81. Also, the figure increased 26.1% sequentially.
Moreover, adjusted revenues increased 19.3% sequentially and 2.4% year over year to $2.58 billion. The reported revenues also surpassed the Zacks Consensus Estimate by 3.2%.
Following the better-than-expected fiscal second-quarter results, its share price rose 6.3% in after-hours trading.
Management remains optimistic about the improving wafer fabrication equipment environment. The company witnessed better-than-expected WFE spending in 2019, driven by strength in foundry and logic.
For 2020, management expects WFE spend in the mid-to-high $50-billion range, driven by sustained strong spending in foundry and logic, and an improved spending in memory. Overall, management expects spending in memory and foundry/logic segments to increase in 2020 on a year-over-year basis.
Lam Research Corporation Price, Consensus and EPS Surprise
China, Taiwan and Korea accounted for 29%, 26% and 18% of the company’s total fiscal second-quarter revenues, respectively. On the contrary,the United States, Japan, Southeast Asia and Europe accounted for 9%, 8%, 7% and 3%, respectively.
Operating Details
Non-GAAP gross margin came in at 45.7%, which expanded 30 basis points (bps) sequentially.
Non-GAAP operating expenses were $480.8 million, reflecting an increase of 11.6% sequentially. As a percentage of sales, research & development expenses marked an increase, while selling, general & administrative costs decreased.
Adjusted operating margin was 27.1%, up 160 bps sequentially. The increase was primarily due to lower-than-expected expenses.
Balance Sheet & Cash Flow
At the end of the fiscal second quarter, cash and cash equivalents, and short-term investments decreased to $4.9 billion from $5.8 billion in the fiscal first quarter.
Cash flow from operating activities was $307.9 million, down from $464 million in the fiscal first quarter. Capital expenditures were $62.1 million, up from $39.3 million in the fiscal first quarter.
During the quarter, Lam Research paid dividends of $166.7 million.
Guidance
For third-quarter fiscal 2020, Lam Research projects revenues to be $2.8 billion (+/- $200 million). The Zacks Consensus Estimate for the same is pegged at $2.58 billion.
Gross margin is projected at 46.5% (+/-1%) and operating margin is expected to be 28% (+/-1%).
Non-GAAP earnings are projected at $4.55 (+/- 40 cents) per share on a share count of nearly 149 million. The Zacks Consensus Estimate for non-GAAP earnings per share is pegged at $4.04.
Zacks Rank & Other Stocks to Consider
Currently, Lam Research carries a Zacks Rank #1 (Strong Buy). Other top-ranked stocks in the broader technology sector include Splunk Inc. , Itron, Inc. (ITRI - Free Report) and Waters Corporation (WAT - Free Report) . While Splunk and Itron sport a Zacks Rank #1, Waters Corp carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for Splunk, Itron and Waters Corp is currently projected at 31.2%, 25% and 9.5%, respectively.
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Lam Research (LRCX) Q2 Earnings & Revenues Beat Estimates
Lam Research Corporation ((LRCX - Free Report) ) reported second-quarter fiscal 2020 non-GAAP earnings of $4.01 per share, which beat the Zacks Consensus Estimate of $3.81. Also, the figure increased 26.1% sequentially.
Moreover, adjusted revenues increased 19.3% sequentially and 2.4% year over year to $2.58 billion. The reported revenues also surpassed the Zacks Consensus Estimate by 3.2%.
Following the better-than-expected fiscal second-quarter results, its share price rose 6.3% in after-hours trading.
Management remains optimistic about the improving wafer fabrication equipment environment. The company witnessed better-than-expected WFE spending in 2019, driven by strength in foundry and logic.
For 2020, management expects WFE spend in the mid-to-high $50-billion range, driven by sustained strong spending in foundry and logic, and an improved spending in memory. Overall, management expects spending in memory and foundry/logic segments to increase in 2020 on a year-over-year basis.
Lam Research Corporation Price, Consensus and EPS Surprise
Lam Research Corporation price-consensus-eps-surprise-chart | Lam Research Corporation Quote
Top Line in Detail
China, Taiwan and Korea accounted for 29%, 26% and 18% of the company’s total fiscal second-quarter revenues, respectively. On the contrary,the United States, Japan, Southeast Asia and Europe accounted for 9%, 8%, 7% and 3%, respectively.
Operating Details
Non-GAAP gross margin came in at 45.7%, which expanded 30 basis points (bps) sequentially.
Non-GAAP operating expenses were $480.8 million, reflecting an increase of 11.6% sequentially. As a percentage of sales, research & development expenses marked an increase, while selling, general & administrative costs decreased.
Adjusted operating margin was 27.1%, up 160 bps sequentially. The increase was primarily due to lower-than-expected expenses.
Balance Sheet & Cash Flow
At the end of the fiscal second quarter, cash and cash equivalents, and short-term investments decreased to $4.9 billion from $5.8 billion in the fiscal first quarter.
Cash flow from operating activities was $307.9 million, down from $464 million in the fiscal first quarter. Capital expenditures were $62.1 million, up from $39.3 million in the fiscal first quarter.
During the quarter, Lam Research paid dividends of $166.7 million.
Guidance
For third-quarter fiscal 2020, Lam Research projects revenues to be $2.8 billion (+/- $200 million). The Zacks Consensus Estimate for the same is pegged at $2.58 billion.
Gross margin is projected at 46.5% (+/-1%) and operating margin is expected to be 28% (+/-1%).
Non-GAAP earnings are projected at $4.55 (+/- 40 cents) per share on a share count of nearly 149 million. The Zacks Consensus Estimate for non-GAAP earnings per share is pegged at $4.04.
Zacks Rank & Other Stocks to Consider
Currently, Lam Research carries a Zacks Rank #1 (Strong Buy). Other top-ranked stocks in the broader technology sector include Splunk Inc. , Itron, Inc. (ITRI - Free Report) and Waters Corporation (WAT - Free Report) . While Splunk and Itron sport a Zacks Rank #1, Waters Corp carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for Splunk, Itron and Waters Corp is currently projected at 31.2%, 25% and 9.5%, respectively.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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