Onto Innovation Inc. (ONTO Quick QuoteONTO - Free Report) reported fourth-quarter 2021 non-GAAP earnings of $1.23 per share, up 71% year over year and beating the Zacks Consensus Estimate by 10.8%.

Revenues of $225.6 million beat the Zacks Consensus Estimate by 4.2%. The top line increased 45.4% year over year and 12% on a quarter-over-quarter basis. The performance was driven by higher demand from several end markets, particularly advanced nodes specialty devices and advanced packaging.

Revenues from the advanced nodes market were up 6%, while revenues from specialty devices and advanced packaging increased 21% year over year.
Based on sources of revenues, sales from specialty devices and advanced packaging contributed 48% to revenues. Advanced node markets contributed 33% and software and services represented 19%.

For 2021, Onto Innovation delivered revenues of $788.9 million, up 42% year over year, while earnings per share came in at $2.86 per share, increasing substantially from 63 cents reported in the previous year.

Onto Innovation Inc. Price, Consensus and EPS Surprise

 

Onto Innovation Inc. price-consensus-eps-surprise-chart | Onto Innovation Inc. Quote

Following the announcement, shares were up 1.1% in the aftermarket trading on Feb 8. In the past year, shares of Onto Innovation have improved 58.6% compared with the industry’s decline of 66.3%.

Margin Details

Total operating expenses increased to $73.9 million, up 21.9% from $60.6 million in the prior-year quarter. The upside was driven by additional hiring. 

Non-GAAP gross profit rose to $123.9 million from $84 million with respective margins of 55% and 54%. Non-GAAP operating income was $69 million compared with $37.6 million in the year-ago quarter. Non-GAAP operating margin came in at 31%, up from 24% reported in the prior-year quarter.

Cash Flow & Liquidity

For 2021, Onto Innovation generated $175 million cash from operating activities. For the year, the company generated a free cash flow of $163 million. As of Jan 1, 2022, the company had $511.3 million in cash and cash equivalents with $69.2 million of other non-current liabilities.

Q1 Guidance

Encouraged by robust fourth-quarter results and a healthy demand curve, Onto Innovation offered bullish guidance for the first quarter of 2022. The company expects revenues in the range of $226-$240 million. Non-GAAP earnings per share are estimated in the band of $1.13-$1.20.

Zacks Rank & Stocks to Consider

Onto Innovation currently has a Zacks Rank #2 (Buy).

Some other top-ranked stocks worth consideration from the broader technology sector include Broadcom (AVGO Quick QuoteAVGO - Free Report) , Apple (AAPL Quick QuoteAAPL - Free Report) and Cadence Design Systems (CDNS Quick QuoteCDNS - Free Report) . While Apple sports a Zacks Rank #1 (Strong Buy), Broadcom and Cadence carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings is pegged at $33.03 per share. The long-term earnings growth rate of the company is pegged at 14.5%.

Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 1.41%. Shares of Broadcom have increased 31.4% in the past year.

The Zacks Consensus Estimate for Apple’s fiscal 2022 earnings is pegged at $6.15 per share. The long-term earnings growth rate of the company is pegged at 12.5%.

Apple’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 20.3%. Shares of AAPL have rallied 29.9% in the past year.

The Zacks Consensus Estimate for Cadence 2021 earnings is pegged at $3.25 per share. The long-term earnings growth rate of the company is pegged at 18.2%.

Cadence’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11%. Shares of CDNS have returned 7.6% in the past year.