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Lam Research (LRCX) Down 6.6% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Lam Research (LRCX - Free Report) . Shares have lost about 6.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lam Research due for a breakout? 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.
Lam Research Q4 Earnings Beat Estimates
Lam Research Corporation delivered fourth-quarter fiscal 2023 non-GAAP earnings of $5.98 per share, which surpassed the Zacks Consensus Estimate by 18.9%. The figure decreased by 32.3% from the year-ago fiscal quarter’s reading.
Revenues of $3.21 billion were above the Zacks Consensus Estimate of $3.12 billion. The figure declined by 30.8% year over year. This was primarily attributed to weakness in the systems business due to sluggish memory spending.
Lam Research’s system revenues were $1.71 billion (53.3% of the total revenues), down 43.1% from the year-ago fiscal quarter’s figure. The reported figure surpassed the Zacks Consensus Estimate of $1.6 billion.
In the Customer Support Business Group, revenues for the reported quarter were $1.49 billion (46.7%), down 8.1% from the year-ago fiscal quarter’s number. The figure lagged the consensus mark of $1.52 billion.
The weak outlook for 2023 wafer fabrication equipment (WFE) spending remains a concern. For 2023, WFE spending is expected to be down in the mid-40% range year over year.
Nevertheless, Lam Research’s proper execution and expanding and diversifying global footprints remain positives. The company remains optimistic about its technological advancements, especially with AI. Also, its strength in 3D DRAM and advanced packaging is a tailwind.
Regions in Detail
China, Korea and Taiwan accounted for 26%, 24% and 20% of Lam Research’s total revenues for the fiscal fourth quarter, respectively. Additionally, Japan, Southeast Asia, the United States and Europe accounted for 10%, 4%, 8% and 8%, respectively.
Operating Details
The non-GAAP gross margin was 45.7%, which expanded 50 basis points (bps) from the year-ago fiscal quarter’s level.
Non-GAAP operating expenses were $589.9 million, down 7% from the prior-year fiscal quarter’s reading. As a percentage of revenues, the figure expanded 470 bps from the year-earlier fiscal quarter’s level to 18.4%.
The non-GAAP operating margin was 27.3%, contracting 420 bps from the year-ago fiscal quarter’s level.
Balance Sheet & Cash Flow
As of Jun 25, 2023, cash and cash equivalents and short-term investments were $5.375 billion compared with $5.369 billion as of Mar 26, 2023.
Cash flow from operating activities was $1.12 billion for the reported quarter, down from $1.73 billion in the previous fiscal quarter. Capital expenditure was $78.7 million in fourth-quarter fiscal 2023 compared with $119 million in third-quarter fiscal 2023.
In the reported quarter, Lam Research paid out dividends of $232.3 million and repurchased shares worth $869 million.
Guidance
For first-quarter fiscal 2024, LRCX expects revenues of $3.4 billion (+/- $300 million).
The non-GAAP gross margin is projected at 46.5% (+/-1%), while the non-GAAP operating margin is expected to be 28% (+/-1%).
Non-GAAP earnings are projected to be $6.05 (+/- 75 cents) per share on a diluted share count of 133 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 10.83% due to these changes.
VGM Scores
At this time, Lam Research has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Lam Research has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Lam Research (LRCX) Down 6.6% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Lam Research (LRCX - Free Report) . Shares have lost about 6.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lam Research due for a breakout? 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.
Lam Research Q4 Earnings Beat Estimates
Lam Research Corporation delivered fourth-quarter fiscal 2023 non-GAAP earnings of $5.98 per share, which surpassed the Zacks Consensus Estimate by 18.9%. The figure decreased by 32.3% from the year-ago fiscal quarter’s reading.
Revenues of $3.21 billion were above the Zacks Consensus Estimate of $3.12 billion. The figure declined by 30.8% year over year. This was primarily attributed to weakness in the systems business due to sluggish memory spending.
Lam Research’s system revenues were $1.71 billion (53.3% of the total revenues), down 43.1% from the year-ago fiscal quarter’s figure. The reported figure surpassed the Zacks Consensus Estimate of $1.6 billion.
In the Customer Support Business Group, revenues for the reported quarter were $1.49 billion (46.7%), down 8.1% from the year-ago fiscal quarter’s number. The figure lagged the consensus mark of $1.52 billion.
The weak outlook for 2023 wafer fabrication equipment (WFE) spending remains a concern. For 2023, WFE spending is expected to be down in the mid-40% range year over year.
Nevertheless, Lam Research’s proper execution and expanding and diversifying global footprints remain positives. The company remains optimistic about its technological advancements, especially with AI. Also, its strength in 3D DRAM and advanced packaging is a tailwind.
Regions in Detail
China, Korea and Taiwan accounted for 26%, 24% and 20% of Lam Research’s total revenues for the fiscal fourth quarter, respectively. Additionally, Japan, Southeast Asia, the United States and Europe accounted for 10%, 4%, 8% and 8%, respectively.
Operating Details
The non-GAAP gross margin was 45.7%, which expanded 50 basis points (bps) from the year-ago fiscal quarter’s level.
Non-GAAP operating expenses were $589.9 million, down 7% from the prior-year fiscal quarter’s reading. As a percentage of revenues, the figure expanded 470 bps from the year-earlier fiscal quarter’s level to 18.4%.
The non-GAAP operating margin was 27.3%, contracting 420 bps from the year-ago fiscal quarter’s level.
Balance Sheet & Cash Flow
As of Jun 25, 2023, cash and cash equivalents and short-term investments were $5.375 billion compared with $5.369 billion as of Mar 26, 2023.
Cash flow from operating activities was $1.12 billion for the reported quarter, down from $1.73 billion in the previous fiscal quarter. Capital expenditure was $78.7 million in fourth-quarter fiscal 2023 compared with $119 million in third-quarter fiscal 2023.
In the reported quarter, Lam Research paid out dividends of $232.3 million and repurchased shares worth $869 million.
Guidance
For first-quarter fiscal 2024, LRCX expects revenues of $3.4 billion (+/- $300 million).
The non-GAAP gross margin is projected at 46.5% (+/-1%), while the non-GAAP operating margin is expected to be 28% (+/-1%).
Non-GAAP earnings are projected to be $6.05 (+/- 75 cents) per share on a diluted share count of 133 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 10.83% due to these changes.
VGM Scores
At this time, Lam Research has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Lam Research has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.