This chip maker beat analysts’ estimates by $0.08 last quarter and 19 analysts have raised estimates for the company in the past 30 days.
Applied Materials (AMAT)
From Dow Theory Forecasts
Applied Materials (AMAT) posted strong April-quarter results, though its guidance fanned fears among some investors that a slowdown in smartphones could ripple through the semiconductor industry.
Per-share profits jumped 54% to $1.22 excluding special items, exceeding the consensus by $0.08. Sales grew 29% to $4.57 billion, also ahead of analyst expectations. Management issued July-quarter guidance ranges with midpoints that imply 36% higher earnings per share on 18% revenue growth.
The consensus had projected growth of 35% for profits and 21% for sales. The company said smartphone suppliers have adjusted capacity plans due to recent lackluster sales of high-end models. Yet fundamentals for the rest of the semiconductor-equipment industry still look robust.
In the days since the quarterly report, Applied Materials’ shares have recovered some of the ground lost on the mixed guidance. The stock trades at just 11 times estimated profits for fiscal 2018 ending October, a 23% discount to the median semiconductor-equipment stock in the S&P 1500 Index. Applied Materials is a Buy and a Long-Term Buy.
Richard Moroney, CFA, Dow Theory Forecasts, www.dowtheory.com, 800-233-5922, May 28, 2018