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Qorvo (QRVO) Down 6.3% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Qorvo (QRVO - Free Report) . Shares have lost about 6.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Qorvo 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 drivers.
Qorvo Q1 Earnings Beat Estimates, Net Sales Rise Y/Y
Qorvo reported strong first-quarter fiscal 2025 results, with both the bottom and top lines beating the respective Zacks Consensus Estimate. The top line rose on a year-over-year basis, backed by solid demand trends in multiple end markets, including defense, aerospace, power management, WIFI, smartphone and automotive.
Net Income
On a GAAP basis, the company reported a net income of $0.4 million or break-even earnings per share against a net loss of $43.6 million or a loss of 44 cents per share in the prior-year quarter. The significant improvement was primarily attributable to top-line growth.
Non-GAAP net income was $83.5 million or 87 cents per share, up from $33.6 million or 34 cents per share in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate by 16 cents.
Revenues
Net sales during the quarter rose to $886.7 million from $651.2 million in the prior-year quarter, exceeding the consensus estimate of $851million. Solid sales improvement in the Connectivity and Sensors Group (CSG) and Advance Cellular Group (ACG) businesses supported revenue growth in the fiscal first quarter. The company is at the forefront of global secular macro trends, including mobility, connectivity, electrification and datafication that are enabling new applications and new user experiences.
High-Performance Analog (HPA) segment contributed $129.5 million in revenues, down from $139.7 million in the year-ago quarter. Inventory corrections in Cellular base station markets affected net sales in this segment.
However, Qorvo is witnessing signs of market recovery in several end markets. The company secured new product orders for several large domestic and international ground-based radar systems. The transition from legacy mechanical systems to active electronics scanning systems is driving growth in the defense and aerospace business.
In power management, the company continues to boast a strong presence in the consumer electronic sector. Healthy traction in automotive also cushioned the top line. Growing demand for DOCSIS 4.0 hybrid power doublers is supporting growth in the infrastructure business.
Net sales in CSG were $114.9 million compared with $99.3 million in the year-ago quarter. The improvement is driven by the growing adoption of Wi-Fi 7 across operator, retail, enterprise and mobile segments. During the quarter, the company supplied more than 75 million Wi-Fi 6 FEMs to India. Solid ultra-wideband demand across various end markets, including automotive, laptop trackpads, wearables and smartphones, also supported the top line in this segment.
Net sales in ACG were $642.3 million, up 55.8% year over year, supported by strong content on multiple large customer platforms.
Other Details
Non-GAAP gross profit rose to $362.7 million from $279.5 million, with respective margins of 40.9% and 42.9%. Non-GAAP operating expenses increased to $264.5 million from $232.7 million in the year-ago period, owing to higher investments in new product development. Non-GAAP operating income was $98.1 million, up from $46.7 million in the year-ago quarter.
Cash Flow & Liquidity
As of Jun 29, 2024, QRVO had $1.08 billion in cash and cash equivalents with $1.55 billion of long-term debt. The company generated $81.1 million in net cash from operating activities, with a free cash flow of $42.9 million. Qorvo repurchased $125 million worth of shares at an average price of $101 per share in the quarter.
Outlook
For second-quarter fiscal 2025, the company expects net sales of $1.03 billion (+/- $25 million). Non-GAAP gross margin is projected to be between 46% and 47%. Non-GAAP earning per share is likely to be $1.75 per share. Management is undertaking various cost and productivity enhancement initiatives across the enterprise to boost profitability in the upcoming quarters. The company expects non-GAAP operating expenses to be around $275 million in the September quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Qorvo has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Qorvo has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Qorvo (QRVO) Down 6.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Qorvo (QRVO - Free Report) . Shares have lost about 6.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Qorvo 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 drivers.
Qorvo Q1 Earnings Beat Estimates, Net Sales Rise Y/Y
Qorvo reported strong first-quarter fiscal 2025 results, with both the bottom and top lines beating the respective Zacks Consensus Estimate. The top line rose on a year-over-year basis, backed by solid demand trends in multiple end markets, including defense, aerospace, power management, WIFI, smartphone and automotive.
Net Income
On a GAAP basis, the company reported a net income of $0.4 million or break-even earnings per share against a net loss of $43.6 million or a loss of 44 cents per share in the prior-year quarter. The significant improvement was primarily attributable to top-line growth.
Non-GAAP net income was $83.5 million or 87 cents per share, up from $33.6 million or 34 cents per share in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate by 16 cents.
Revenues
Net sales during the quarter rose to $886.7 million from $651.2 million in the prior-year quarter, exceeding the consensus estimate of $851million. Solid sales improvement in the Connectivity and Sensors Group (CSG) and Advance Cellular Group (ACG) businesses supported revenue growth in the fiscal first quarter. The company is at the forefront of global secular macro trends, including mobility, connectivity, electrification and datafication that are enabling new applications and new user experiences.
High-Performance Analog (HPA) segment contributed $129.5 million in revenues, down from $139.7 million in the year-ago quarter. Inventory corrections in Cellular base station markets affected net sales in this segment.
However, Qorvo is witnessing signs of market recovery in several end markets. The company secured new product orders for several large domestic and international ground-based radar systems. The transition from legacy mechanical systems to active electronics scanning systems is driving growth in the defense and aerospace business.
In power management, the company continues to boast a strong presence in the consumer electronic sector. Healthy traction in automotive also cushioned the top line. Growing demand for DOCSIS 4.0 hybrid power doublers is supporting growth in the infrastructure business.
Net sales in CSG were $114.9 million compared with $99.3 million in the year-ago quarter. The improvement is driven by the growing adoption of Wi-Fi 7 across operator, retail, enterprise and mobile segments. During the quarter, the company supplied more than 75 million Wi-Fi 6 FEMs to India. Solid ultra-wideband demand across various end markets, including automotive, laptop trackpads, wearables and smartphones, also supported the top line in this segment.
Net sales in ACG were $642.3 million, up 55.8% year over year, supported by strong content on multiple large customer platforms.
Other Details
Non-GAAP gross profit rose to $362.7 million from $279.5 million, with respective margins of 40.9% and 42.9%. Non-GAAP operating expenses increased to $264.5 million from $232.7 million in the year-ago period, owing to higher investments in new product development. Non-GAAP operating income was $98.1 million, up from $46.7 million in the year-ago quarter.
Cash Flow & Liquidity
As of Jun 29, 2024, QRVO had $1.08 billion in cash and cash equivalents with $1.55 billion of long-term debt. The company generated $81.1 million in net cash from operating activities, with a free cash flow of $42.9 million. Qorvo repurchased $125 million worth of shares at an average price of $101 per share in the quarter.
Outlook
For second-quarter fiscal 2025, the company expects net sales of $1.03 billion (+/- $25 million). Non-GAAP gross margin is projected to be between 46% and 47%. Non-GAAP earning per share is likely to be $1.75 per share. Management is undertaking various cost and productivity enhancement initiatives across the enterprise to boost profitability in the upcoming quarters. The company expects non-GAAP operating expenses to be around $275 million in the September quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Qorvo has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Qorvo has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.