It has been about a month since the last earnings report for Lam Research (LRCX Quick QuoteLRCX - Free Report) . Shares have lost about 4% 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 & Revenues Beat Estimates

Lam Research Corporation delivered fourth-quarter fiscal 2024 non-GAAP earnings of $8.14 per share, which surpassed the Zacks Consensus Estimate by 8.2%. The figure increased 36.1% from the year-ago quarter.

Revenues of $3.87 billion surpassed the Zacks Consensus Estimate of $3.81 billion. The figure increased 20.7% year over year. 

Year-over-year growth in the top line was driven by the strong performance of the Customer Support Business Group and the rebound in the System business. Improving memory spending was a plus.

Lam Research’s System revenues were $2.17 billion (56% of the total revenues), up 26.9% from the year-ago quarter. The reported figure missed the Zacks Consensus Estimate of $2.38 billion.

In the Customer Support Business Group, revenues for the reported quarter were $1.7 billion (44% of the total revenues), up 13.7% from the year-ago quarter. The figure topped the consensus mark of $1.43 billion.

Lam Research remains optimistic about its strategic investments in research and development activities, and operations, which position it well to capitalize on the growing wafer fab equipment (WFE) spending.

For 2024, WFE is expected to be in the mid-$90-billion range. Foundry/logic, DRAM and NAND investments are expected to be higher on a year-over-year basis. Growing demand related to high-bandwidth memory ramp is a positive.

Strengthening domestic spending in China is a plus.

However, global spending on mature nodes is likely to be flat year over year.

Regions in Detail

China, Korea and Taiwan accounted for 39%, 18% and 15%, respectively, of Lam Research’s total revenues for the fiscal fourth quarter. Japan, Southeast Asia, the United States and Europe accounted for 7%, 8%, 10% and 3%, respectively.

Operating Details

The non-GAAP gross margin was 48.5%, which expanded 280 basis points (bps) from the year-ago quarter.

Non-GAAP operating expenses were $697.7 million, up 16.8% from the prior-year quarter. As a percentage of revenues, the figure contracted 60 bps from the year-earlier quarter to 17.8%.

The non-GAAP operating margin was 30.7%, expanding 340 bps from the year-ago quarter.

Balance Sheet & Cash Flow

As of Jun 30, 2024, cash and cash equivalents were $5.85 billion compared with $5.67 billion as of Mar 31, 2024.

Cash flow from operating activities was $862.43 million for the reported quarter, down from $1.38 billion in the previous quarter.

In the reported quarter, Lam Research paid out dividends of $261 million and repurchased shares worth $382 million.

Guidance

For first-quarter fiscal 2025, LRCX expects revenues of $4.05 billion (+/- $300 million). 

The non-GAAP gross margin is projected at 47% (+/-1%), whereas the non-GAAP operating margin is expected to be 29.5% (+/-1%).

Non-GAAP earnings are projected to be $8.00 (+/- 75 cents) per share on a diluted share count of 131 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

Currently, Lam Research has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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

Lam Research has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.