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Amkor Q3 Earnings Miss: Will Dim Q4 Guidance Pull Down the Stock?

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Amkor Technology (AMKR - Free Report) reported lower-than-expected bottom-line results for third-quarter 2024. AMKR’s third-quarter earnings declined 9.3% year over year to 49 cents per share, which missed the Zacks Consensus Estimate by a penny.

Amkor reported revenues of $1.86 billion for the quarter, which surpassed the consensus mark of $1.83 billion. The top line also increased 2.2% year over year, mainly driven by the robust demand for the Advanced SiP technology to support the Communications and Consumer end markets.

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AMKR’s overall performance in the third quarter was affected by the ongoing inventory corrections and weak demand in the Automotive and Industrial end markets. Constraints and high bandwidth memory supply in the Computing end market also limit revenue growth.

Looking forward, Amkor provided sales and earnings guidance for the fourth quarter, which is lower than the Zacks Consensus Estimate. The slower-than-expected recovery in the automotive and industrial markets, together with an anticipation of a higher seasonal decline in the communication end market is likely to hurt overall growth in the fourth quarter.

Amkor’s lower-than-expected third-quarter earnings, along with the dismal fourth-quarter guidance, are anticipated to further drag down its share price. AMKR stock has plunged 11.3% year to date, underperforming the Zacks Electronics – Semiconductor industry’s return of 37.5%.

 

Amkor Technology, Inc. Price, Consensus and EPS Surprise

Amkor Technology, Inc. Price, Consensus and EPS Surprise

Amkor Technology, Inc. price-consensus-eps-surprise-chart | Amkor Technology, Inc. Quote

AMKR’s Q3 Details

Sales from Advanced products, which comprise flip chip, memory and wafer-level processing and related test services, accounted for 84.2% of the total third-quarter revenues. Mainstream products, which include all other wire-bond packaging and related test services, accounted for 15.8% of the total revenues.

In terms of the end market details, Communications (smartphones, tablets) contributed 52% of the third-quarter revenues. The Automotive, industrial, and other (ADAS, electrification, infotainment, safety) accounted for 16% of third-quarter revenues.

The Consumer (AR & gaming, connected home, home electronics, wearables) market generated 16% of the revenues while the Computing (data center, infrastructure, PC/laptop, storage) accounted for the remaining 16%.
The operating income margin for the third quarter was pinned at 8%, up 240 basis points from the previous quarter but down 110 basis points from the year-ago quarter. Third-quarter EBITDA of $309 million increased 25% sequentially but declined 7% year over year.

AMKR’s Balance Sheet & Cash Flow

As of Sept. 30, 2024, total cash and short-term investments were $1.47 billion, down from $1.55 billion at the end of the second quarter. Long-term debt at the end of the third quarter was $894 million, down from $949.3 million at the end of the second quarter.

The company generated an operating cash flow of $164.2 million in the third quarter and $551.3 million in the first three quarters of 2024.

AMKR’s Guidance for Q4 2024

AMKR anticipates revenues between $1.60 billion and $1.70 billion for the fourth quarter. The Zacks Consensus Estimate for revenues is pegged at $1.85 billion.

The gross margin for the fourth quarter is anticipated between 13.5% and 15.5%. Net income for the fourth quarter is projected in the band of $70-$110 million. The company estimates non-GAAP earnings per share in the range of 28-44 cents. The consensus mark for the bottom line is pinned at 54 cents per share.

Zacks Rank & Stocks to Consider

Currently, AMKR carries a Zacks Rank #3 (Hold) at present. 

Arista Networks (ANET - Free Report) , AudioEye (AEYE - Free Report) and FormFactor (FORM - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. 

Arista Networks and AudioEye carry a Zacks Rank #2 (Buy) each, while FormFactor sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arista Networks’ shares have surged 66.6% year to date. ANET is set to report its third-quarter 2024 results on Nov. 7.

AudioEye shares have skyrocketed 314.2% year to date. AEYE is set to report its fourth-quarter fiscal 2024 results on Nov. 7.

FormFactor shares have risen 5.7% year to date. FORM is set to report its third-quarter 2024 results on Oct. 30.

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