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Why Is NXP (NXPI) Down 0.3% Since Last Earnings Report?
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It has been about a month since the last earnings report for NXP Semiconductors (NXPI - Free Report) . Shares have lost about 0.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is NXP due for a breakout? 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.
NXP Q2 Earnings & Revenues Surpass Estimates
NXP Semiconductors reported second-quarter 2022 non-GAAP earnings of $4.74 per share, which outpaced the Zacks Consensus Estimate by 40%. Further, the figure increased 99% year over year and 37%, sequentially.
Revenues of $3.31 billion surpassed the Zacks Consensus Estimate of $3.27 billion. The figure was up 28% from the year-ago period’s level and 6%, sequentially. It was also close to the upper end of the guided range of $3.175-$3.375 billion.
Top-line growth was driven by a strong performance across the automotive, industrial & IoT, mobile, and communication infrastructure & others’ end markets in the reported quarter.
Auto radar systems, auto domain and zonal processors, auto electrification systems, secure connected edge solutions, UWB secure access solutions and RF power for 5G infrastructure remained key catalysts.
End-Market Detail
Automotive generated $1.71 billion of revenues (contributing 52% to the total revenues), reflecting a year-over-year increase of 36%. Growth was driven by innovation in systems solutions. NXPI’s robust sensing, processing and control applications aided revenue growth.
Revenues from Industrial & IoT were $713 million (22% of the top line), which rose 25% from the prior-year quarter’s level. Growing momentum in connected edge processing, connectivity and security remained a tailwind.
Revenues from Mobile were $388 million (12% of total revenues), up 12% from the year-ago period’s level. The increment in revenues was driven by an increased attach rate. Strong momentum in secure mobile wallet, access and identification supported revenue growth.
Communication Infrastructure & Others generated $498 million of revenues (which contributed 15% to the total revenues), up 20% year over year. The new cellular standards contributed well to segmental growth. NXP Semiconductors’ strong position in high-power RF power remained a positive.
Operating Results
The non-GAAP gross margin was 57.8%, which expanded 170 basis points (bps) from the year-ago quarter’s level.
Research and development (R&D) expenses were $542 million, up 14% year over year. Selling, general and administrative (SG&A) expenses increased 13% year over year to $265 million. As a percentage of revenues, R&D and SG&A expenses contracted 200 bps and 100 bps year over year to 16% and 8%, respectively.
The non-GAAP operating margin of 36% for the reported quarter expanded 400 bps from the prior-year period’s figure.
Balance Sheet & Cash Flow
As of Jul 3, 2022, cash and cash equivalent balance was $2.55 billion, down from $2.68 billion as of Apr 3, 2022.
Inventories were $1.46 billion at the end of the second quarter of 2022, up from $1.31 billion in the first quarter of 2022. Accounts receivables increased to $996 million from $925 million in the previous quarter.
Long-term debt was $11.2 billion at the end of the quarter under review compared with $10.6 billion in the last reported quarter.
NXPI generated a cash flow of $819 million in the second quarter of 2022, down from $856 million in the first quarter of 2022.
Its capex investment stood at $268 million, down from $279 million in the prior quarter. NXPI generated a free cash flow of $551 million in the reported quarter.
Q322 Guidance
For third-quarter 2022, NXP Semiconductors expects revenues of $3.35-$3.50 billion, suggesting growth of 17-22% from the year-ago quarter’s reported figure.
NXPI expects a non-GAAP gross margin between 57.3% and 58.3%. The non-GAAP operating margin is anticipated between 35.5% and 36.7%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 5.79% due to these changes.
VGM Scores
At this time, NXP has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, NXP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is NXP (NXPI) Down 0.3% Since Last Earnings Report?
It has been about a month since the last earnings report for NXP Semiconductors (NXPI - Free Report) . Shares have lost about 0.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is NXP due for a breakout? 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.
NXP Q2 Earnings & Revenues Surpass Estimates
NXP Semiconductors reported second-quarter 2022 non-GAAP earnings of $4.74 per share, which outpaced the Zacks Consensus Estimate by 40%. Further, the figure increased 99% year over year and 37%, sequentially.
Revenues of $3.31 billion surpassed the Zacks Consensus Estimate of $3.27 billion. The figure was up 28% from the year-ago period’s level and 6%, sequentially. It was also close to the upper end of the guided range of $3.175-$3.375 billion.
Top-line growth was driven by a strong performance across the automotive, industrial & IoT, mobile, and communication infrastructure & others’ end markets in the reported quarter.
Auto radar systems, auto domain and zonal processors, auto electrification systems, secure connected edge solutions, UWB secure access solutions and RF power for 5G infrastructure remained key catalysts.
End-Market Detail
Automotive generated $1.71 billion of revenues (contributing 52% to the total revenues), reflecting a year-over-year increase of 36%. Growth was driven by innovation in systems solutions. NXPI’s robust sensing, processing and control applications aided revenue growth.
Revenues from Industrial & IoT were $713 million (22% of the top line), which rose 25% from the prior-year quarter’s level. Growing momentum in connected edge processing, connectivity and security remained a tailwind.
Revenues from Mobile were $388 million (12% of total revenues), up 12% from the year-ago period’s level. The increment in revenues was driven by an increased attach rate. Strong momentum in secure mobile wallet, access and identification supported revenue growth.
Communication Infrastructure & Others generated $498 million of revenues (which contributed 15% to the total revenues), up 20% year over year. The new cellular standards contributed well to segmental growth. NXP Semiconductors’ strong position in high-power RF power remained a positive.
Operating Results
The non-GAAP gross margin was 57.8%, which expanded 170 basis points (bps) from the year-ago quarter’s level.
Research and development (R&D) expenses were $542 million, up 14% year over year. Selling, general and administrative (SG&A) expenses increased 13% year over year to $265 million. As a percentage of revenues, R&D and SG&A expenses contracted 200 bps and 100 bps year over year to 16% and 8%, respectively.
The non-GAAP operating margin of 36% for the reported quarter expanded 400 bps from the prior-year period’s figure.
Balance Sheet & Cash Flow
As of Jul 3, 2022, cash and cash equivalent balance was $2.55 billion, down from $2.68 billion as of Apr 3, 2022.
Inventories were $1.46 billion at the end of the second quarter of 2022, up from $1.31 billion in the first quarter of 2022. Accounts receivables increased to $996 million from $925 million in the previous quarter.
Long-term debt was $11.2 billion at the end of the quarter under review compared with $10.6 billion in the last reported quarter.
NXPI generated a cash flow of $819 million in the second quarter of 2022, down from $856 million in the first quarter of 2022.
Its capex investment stood at $268 million, down from $279 million in the prior quarter. NXPI generated a free cash flow of $551 million in the reported quarter.
Q322 Guidance
For third-quarter 2022, NXP Semiconductors expects revenues of $3.35-$3.50 billion, suggesting growth of 17-22% from the year-ago quarter’s reported figure.
NXPI expects a non-GAAP gross margin between 57.3% and 58.3%. The non-GAAP operating margin is anticipated between 35.5% and 36.7%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 5.79% due to these changes.
VGM Scores
At this time, NXP has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, NXP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.