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Semtech (SMTC) Down 0.7% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Semtech (SMTC - Free Report) . Shares have lost about 0.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Semtech due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Semtech Q3 Earnings and Revenues Top Estimates
Semtech Corporation’s fiscal third-quarter 2022 non-GAAP earnings of 74 cents per share surpassed the Zacks Consensus Estimate by 2.8%. The reported earnings increased 13.9% sequentially and 57.5% year over year.
Net sales of $194.9 million increased 5.4% sequentially and 26.5% from the prior-year quarter. It also outpaced the Zacks Consensus Estimate by 1%.
The top-line growth was driven by strong momentum across industrial and high-end consumer markets served. Additionally, Semtech’s LoRa business, Tri-Edge platform, 10G PON products, 5G wireless and broad-based protection platforms contributed well to its quarterly performance.
For the fiscal third quarter, shipments in Asia, North America and Europe represented 78%, 12% and 10% of net sales, respectively.
Revenues by End Market
Net revenues from the infrastructure market, which represented 34% of its total revenues, decreased 1% on a sequential basis due to decline in data center revenues.
Also, revenues from the industrial market increased 17% from the prior quarter and represented 35% of total net revenues. The sequential increase is driven by strength in LoRa and broad-based protection businesses.
Additionally, net revenues from the high-end consumer market represented 31% of total revenues and increased 2% sequentially. High-end consumer market consists of two parts – mobile devices and other consumer systems, representing net revenues of 20% and 11%, respectively.
Revenues by Product Group
Signal Integrity Product Group revenues contributed 39% to total revenues. The reported figure increased 3% sequentially. The increase was driven by strong demand across PON and base station infrastructure markets.
Revenues from its Protection Product Group represented 29% of the total revenues. The figure was up 14% sequentially and 36% year over year. The increase was driven by strong consumer demand in Asia and North America.
Wireless and Sensing Product Group revenues, which contributed 32% to total revenues, increased 1% sequentially and 23% year over year. The increase was driven by record net sales of LoRa platform products.
Operating Results
Non-GAAP gross margin of 63.8% expanded 230 basis points (bps) year over year, driven by a more favorable product mix.
Fiscal third-quarter adjusted selling, general and administrative expenses increased 4.8% year over year to $34.2 million. Also, adjusted product development and engineering expenses increased 36.3% from the year-ago quarter to $33.3 million.
Non-GAAP operating margin of 29.2% also expanded 210 bps year over year.
Balance Sheet and Cash Flow
As of Oct 31, 2021, cash and cash equivalents were $276.6 million compared with $262.7 million on Aug 1, 2021.
Account receivables were $74.3 million, up from $73.1 million in the fiscal second quarter. Long-term debt was $175.6 million, up from $175.4 million in the previous quarter.
For the reported quarter, cash flow from operations was $66.5 million, net capital expenditures amounted to $5.3 million and free cash flow totaled $61.2 million.
During the quarter, the company repurchased 387,163 shares for $30 million.
Guidance
For fiscal fourth-quarter 2022, management expects net sales in the range of $184-$194 million. Non-GAAP earnings per share are expected in the range of 65-73 cents.
Non-GAAP gross margin is expected within 63.5-64.5%. Also, management projects SG&A expenses within $34-$35 million, and research and development costs in the range of $32.5-$33.5 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 9.82% due to these changes.
VGM Scores
At this time, Semtech has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. 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 B. 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, Semtech has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Semtech (SMTC) Down 0.7% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Semtech (SMTC - Free Report) . Shares have lost about 0.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Semtech due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Semtech Q3 Earnings and Revenues Top Estimates
Semtech Corporation’s fiscal third-quarter 2022 non-GAAP earnings of 74 cents per share surpassed the Zacks Consensus Estimate by 2.8%. The reported earnings increased 13.9% sequentially and 57.5% year over year.
Net sales of $194.9 million increased 5.4% sequentially and 26.5% from the prior-year quarter. It also outpaced the Zacks Consensus Estimate by 1%.
The top-line growth was driven by strong momentum across industrial and high-end consumer markets served. Additionally, Semtech’s LoRa business, Tri-Edge platform, 10G PON products, 5G wireless and broad-based protection platforms contributed well to its quarterly performance.
For the fiscal third quarter, shipments in Asia, North America and Europe represented 78%, 12% and 10% of net sales, respectively.
Revenues by End Market
Net revenues from the infrastructure market, which represented 34% of its total revenues, decreased 1% on a sequential basis due to decline in data center revenues.
Also, revenues from the industrial market increased 17% from the prior quarter and represented 35% of total net revenues. The sequential increase is driven by strength in LoRa and broad-based protection businesses.
Additionally, net revenues from the high-end consumer market represented 31% of total revenues and increased 2% sequentially. High-end consumer market consists of two parts –
mobile devices and other consumer systems, representing net revenues of 20% and 11%, respectively.
Revenues by Product Group
Signal Integrity Product Group revenues contributed 39% to total revenues. The reported figure increased 3% sequentially. The increase was driven by strong demand across PON and base station infrastructure markets.
Revenues from its Protection Product Group represented 29% of the total revenues. The figure was up 14% sequentially and 36% year over year. The increase was driven by strong consumer demand in Asia and North America.
Wireless and Sensing Product Group revenues, which contributed 32% to total revenues, increased 1% sequentially and 23% year over year. The increase was driven by record net sales of LoRa platform products.
Operating Results
Non-GAAP gross margin of 63.8% expanded 230 basis points (bps) year over year, driven by a more favorable product mix.
Fiscal third-quarter adjusted selling, general and administrative expenses increased 4.8% year over year to $34.2 million. Also, adjusted product development and engineering expenses increased 36.3% from the year-ago quarter to $33.3 million.
Non-GAAP operating margin of 29.2% also expanded 210 bps year over year.
Balance Sheet and Cash Flow
As of Oct 31, 2021, cash and cash equivalents were $276.6 million compared with $262.7 million on Aug 1, 2021.
Account receivables were $74.3 million, up from $73.1 million in the fiscal second quarter. Long-term debt was $175.6 million, up from $175.4 million in the previous quarter.
For the reported quarter, cash flow from operations was $66.5 million, net capital expenditures amounted to $5.3 million and free cash flow totaled $61.2 million.
During the quarter, the company repurchased 387,163 shares for $30 million.
Guidance
For fiscal fourth-quarter 2022, management expects net sales in the range of $184-$194 million. Non-GAAP earnings per share are expected in the range of 65-73 cents.
Non-GAAP gross margin is expected within 63.5-64.5%. Also, management projects SG&A expenses within $34-$35 million, and research and development costs in the range of $32.5-$33.5 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 9.82% due to these changes.
VGM Scores
At this time, Semtech has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. 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 B. 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, Semtech has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.