Yahoo Finance Why Is Lam Research (LRCX) Up 13.7% Since Last Earnings Report?
A month has gone by since the last earnings report for Lam Research (LRCX). Shares have added about 13.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Lam Research due for a pullback? 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.
Lam Research Q3 Earnings Beat Estimates
Lam Research Corporation reported third-quarter fiscal 2023 non-GAAP earnings of $6.99 per share, which surpassed the Zacks Consensus Estimate by 7.04%. The figure decreased by 5.5% from the year-ago fiscal quarter’s reading.
Revenues of $3.87 billion were above the Zacks Consensus Estimate of $3.82 billion. The figure declined 4.7% year over year. This was attributed to weakness in the systems business due to sluggish memory spending.
Strength in foundry systems and leading edge and specialty technologies was a positive. Improving customer support business also contributed well.
Lam Research’s system revenues were $2.3 billion (58.3% of the total revenues), down 14.9% from the year-ago fiscal quarter’s figure.
In the Customer Support Business Group, revenues for the reported quarter were $1.6 billion (41.7%), up 14.5% from the year-ago fiscal quarter’s number.
Lam Research’s proper execution, expanding and diversifying global footprints and growing installed base remain positives. The company remains optimistic about its technological advancements with a focus on technology inflections, especially in foundry-logic devices, strength in ‘dry resist’ technology and solid momentum in etch and deposition solutions.
The weak outlook for 2023 wafer fabrication equipment (WFE) spending remains a concern. For 2023, WFE spending is expected to be in the low- to mid-$70 billion range.
Regions in Detail
China, Korea and Taiwan accounted for 22%, 22% and 18% of Lam Research’s total revenues for the fiscal third quarter, respectively. Additionally, Japan, Southeast Asia, the United States and Europe accounted for 10%, 4%, 16% and 8%, respectively.
Operating Details
The non-GAAP gross margin was 44%, which contracted 70 basis points (bps) from the year-ago fiscal quarter’s level.
Non-GAAP operating expenses were $607.6 million, down 2.1% from the prior-year fiscal quarter’s reading. As a percentage of revenues, the figure expanded 40 bps from the year-earlier fiscal quarter’s level to 15.7%.
The non-GAAP operating margin was 28.3%, contracting 110 bps from the year-ago fiscal quarter’s level.
Balance Sheet & Cash Flow
As of Mar 26, 2023, cash and cash equivalents and short-term investments increased to $5.31 billion from $4.59 billion as of Dec 25, 2022.
Cash flow from operating activities was $1.73 billion for the reported quarter, up from $1.14 billion in the previous fiscal quarter. Capital expenditure was $119 million in third-quarter fiscal 2023 compared with $163 million in second-quarter fiscal 2023.
In the reported quarter, Lam Research paid out dividends of $234 million and repurchased shares worth $582 million.
Guidance
For fourth-quarter fiscal 2023, LRCX expects revenues of $3.1 billion (+/- $300 million).
The non-GAAP gross margin is projected at 44% (+/-1%), while the non-GAAP operating margin is expected to be 25.5% (+/-1%).
Non-GAAP earnings are projected to be $5.00 (+/- 75 cents) per share on a diluted share count of 134 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -10.79% due to these changes.
VGM Scores
At this time, Lam Research has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Lam Research has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Lam Research Corporation (LRCX) : Free Stock Analysis Report
