Why Applied Materials Earnings Are So Great Despite Friday's Headwinds?

Chris Lange

Applied Materials Inc. (NASDAQ: AMAT) released its fiscal second-quarter financial results after the markets closed on Thursday. The company said that it had $0.70 in earnings per share (EPS) and $3.54 billion in revenue, compared with consensus estimates that called for $0.66 in EPS and $3.48 billion in revenue. The same period of last year reportedly had EPS of $1.19 on $4.57 billion in revenue.

During the most recent quarter, net revenues had dropped about 23% year to date. The company noted a gross margin of 43.5%, down from 45.9% in the same period of last year.

The company returned $814 million to shareholders, including $625 million in share repurchases and dividends of $189 million. As announced on March 8, the board of directors approved a 5% increase in the quarterly cash dividend to $0.21 from $0.20 per share.

Looking ahead to the fiscal third quarter, the company expects to see EPS in the range of $0.67 to $0.75 and net sales of $3.525 billion, give or take $150 million. The consensus estimates are $0.69 in EPS and $3.51 billion in revenue for the quarter.

Gary Dickerson, president and CEO, commented:

In the second fiscal quarter Applied Materials delivered results toward the top-end of our guidance range, reflecting solid execution across the company in a business environment that remains challenging. Looking ahead, we maintain a positive view of our markets as powerful new demand drivers for semiconductors and displays take shape, creating tremendous opportunities for Applied Materials.

Shares of Applied Materials closed Thursday at $41.66, in a 52-week range of $28.79 to $53.23. The consensus price target is $47.75. Following the announcement, the stock was up about 3% at $42.80 in early trading indications Friday.