A month has gone by since the last earnings report for NXP Semiconductors (NXPI Quick QuoteNXPI - Free Report) . Shares have added about 2.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is NXP due for a pullback? 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 Q4 Earnings & Revenues Surpass Estimates, Up Y/Y

NXP Semiconductors N.V. reported fourth-quarter 2020 non-GAAP earnings of $2.68 per share, which outpaced the Zacks Consensus Estimate of $2.11. The figure increased 11.2% year over year and 57.6% sequentially.

Net sales of $2.51 billion surpassed the Zacks Consensus Estimate by 1.7%. The figure was up 9% from the year-ago period and 11% on a sequential basis.

Let’s delve deeper into the numbers.

Segments in Detail

Automotive generated $1.2 billion sales (contributing 48% to its net sales), which reflects an increase of 24% sequentially and 9% year over year.

Sales from Industrial & IoT came in at $511 million (20% of net sales), down 1% sequentially but up 23% from the prior-year quarter.

Sales from Mobile came in at $409 million (16% of net sales), up 21% sequentially and 23% from the year-ago level.

Communication Infrastructure & Others generated $394 million sales (which contributed 16% to its net sales), down 13% sequentially and 14% year over year.

Operating Results

Non-GAAP gross margin was 52.9%, down 130 basis points (bps) from the year-ago quarter but up 280 bps sequentially.

Operating expenses were $829 million, 18.2% lower than the year-ago quarter.

Non-GAAP operating margin of 30.5% for the reported quarter expanded 470 bps from the prior-year period and 60 bps sequentially.

Balance Sheet & Cash Flow

At fourth quarter-end, cash and cash equivalent balance were $2.3 billion compared with $3.6 billion in the prior quarter.

Inventories were $1 billion versus $1.1 billion in the third quarter. Accounts receivables increased to $765 million from $755 million in the third quarter.

Long-term debt was $7.6 billion for the reported quarter.

During the fourth quarter, NXP returned $105 million to shareholders, primarily through previously announced dividend payments.

NXP generated cash flow of $1.03 billion, up from $527 million in the third quarter. Capital expenditure was $103 million versus $68 million in the prior quarter.

Guidance

For the first quarter, NXP projects revenues to be $2.55 billion, indicating an increase of 2% sequentially and 26% year over year.

Non-GAAP gross margin is projected at 53.5% and non-GAAP operating margin is expected to be 30.4%.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 26.7% due to these changes.

VGM Scores

At this time, NXP has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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. It comes with little surprise NXP has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.