Why Solid Growth Isn’t Propping Up Applied Materials Stock
Applied Materials shares retreated early Friday after it reported disappointing second-quarter results and offered no guidance.
When Applied Materials Inc. (NASDAQ: AMAT | AMAT Price Prediction) reported its most recent quarterly results after the markets closed on Thursday, the firm said that it had $0.89 in earnings per share (EPS) and $3.96 billion in revenue. That compared with consensus estimates of $0.95 in EPS and $4.15 billion in revenue, as well as the $0.70 per share and $3.54 billion posted in the fiscal second quarter of last year.
During the most recent quarter, net revenues had increased 12% year over year. The company noted a gross margin of 44.6%, up from 43.5% in the same period of last year.
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In terms of its segments, the company reported as follows:
- Semiconductor Systems net sales increased 17.5% year over year to $2.57 billion, with an operating income of $798 million.
- Applied Global Services net sales increased 3.5% to $1.02 billion, with an operating income of $260 million.
- Display and Adjacent Markets net sales increased 4.9% to $365 million, with an operating income of $78 million.
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Applied Materials returned $392 million to shareholders, including $199 million in share repurchases and dividends of $193 million. At the end of the quarter, cash, cash equivalents and short-term investments totaled $5.70 billion, compared with $3.62 billion at the end of the previous year.
Note that Applied Materials did not offer any guidance for the fiscal third quarter. Analysts are calling for $0.93 in EPS and $4.13 billion in revenue.
Gary Dickerson, president and CEO, commented:
As we navigate the challenges created by COVID-19, we have rallied the company around safety, productivity and keeping our customers and the industry moving forward. While the situation remains fluid, based on the visibility we have today, our supply chain is recovering, and underlying demand for our semiconductor equipment and services remains robust.
Applied Materials stock traded down 3% at $52.60 early Friday, in a 52-week range of $36.64 to $69.44. The consensus price target is $65.48.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
