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Why Is Amkor (AMKR) Down 4.8% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Amkor Technology, Inc. (AMKR - Free Report) . Shares have lost about 4.8% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Amkor Q1 Loss Wider Than Expected, Revenues Beat
Amkor Technology, Inc. reported first-quarter 2017 adjusted loss of 4 cents per share, greater than the Zacks Consensus Estimate of a loss of 3 cents.
Revenues of $914 million were up 5.2% year over year. The increase was driven by strength in all its end markets, except the smartphone market which witnessed a seasonal slowdown in the first quarter.
The top line was within the company’s guidance of $860–$940 million and came in above the Zacks Consensus Estimate of $900 million.
Revenues by Product Lines
The revenue mix in terms of product lines is discussed below.
Advanced Products include flip chip scale packages, wafer-level chip scale packages and flip chip ball grid array packages. It accounted for approximately 42% of first-quarter revenues. Revenues were down 15.1% sequentially but up 7.6% year over year.
Mainstream products include lead frame packages, substrate-based wirebond packages and MEMS packages. It accounted for the remaining 58% of first-quarter revenues. Revenues were down 7.1% sequentially but up 3.5% year over year.
Margins
Gross margin was 15.6%, up 150 basis points (bps) from the year-ago quarter. The increase was due to higher revenues and a favorable mix.
Non-GAAP operating expenses of $118.3 million increased 17.3% year over year. As a percentage of sales, selling, general and administrative expenses decreased, while research and development expenses increased.
As a result, pro forma operating margin was 2.7%, up 20 bps year over year.
Net Income
Amkor generated first-quarter net income of ($10) million compared with ($0.875) million in the year-ago quarter. There were no one-time items in the fourth quarter. Therefore, the GAAP loss per share was the same as the pro forma loss of 4 cents compared with 0 cent in the year-ago quarter.
Balance Sheet & Cash Flow
During the reported quarter, cash flow from operations was $103 million compared with $238 million in the prior quarter. Capex was $88 million against $168 million in the prior quarter.
Total cash, cash equivalents and restricted cash were $616 million in the first quarter, up from $551.5 billion in the prior quarter.
2Q Guidance
For the second quarter, Amkor expects revenues in the range of $955–$1.035 billion, up 5% to 13% sequentially. The Zacks Consensus Estimate is pegged at $954.04 million.
Gross margin is expected within 16–20%. Earnings per share are expected within 36–52 cents on a GAAP basis. The guidance also includes proceeds from the sale of the company’s K1 factory.
Our Take
Amkor Technology is one of the largest providers of semiconductor packaging and test services. It packages and tests integrated circuits (ICs) for chip manufacturers, fabless semiconductor companies and contract foundries.
Management sounded upbeat about the company’s progress toward closure of the Nanium acquisition. It expects to complete the acquisition of Nanium in the second quarter. The company expects the deal to strengthen its foothold in the fast-growing market of wafer-level packaging.
Though we remain concerned about weakness in the smartphone market, Amkor is well positioned in growing markets like industrial and auto and communication. Also, its high revenues and strong cash flow generation is a big positive.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Amkor's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.
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Why Is Amkor (AMKR) Down 4.8% Since the Last Earnings Report?
It has been about a month since the last earnings report for Amkor Technology, Inc. (AMKR - Free Report) . Shares have lost about 4.8% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Amkor Q1 Loss Wider Than Expected, Revenues Beat
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Amkor Technology, Inc. Price and Consensus
Amkor Technology, Inc. Price and Consensus | Amkor Technology, Inc. Quote
VGM Scores
At this time, Amkor's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.