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Xilinx (XLNX) Stock Gains as Q3 Earnings & Sales Top Estimates

·5-min read

Shares of Xilinx Inc. XLNX rallied 1.4% during Wednesday’s extended trading session after the company reported overwhelming third-quarter fiscal 2022 results, wherein the top and bottom lines surpassed the respective Zacks Consensus Estimate and marked significant year-over-year improvements as well.

The programmable logic device supplier delivered fiscal third-quarter adjusted earnings of $1.29 per share, beating the Zacks Consensus Estimate of $1.05. Moreover, the bottom line registered an increase of 65% year over year and 22% sequentially.

Revenues of $1.01 billion surpassed the Zacks Consensus Estimate of $953.8 million and climbed 26% year over year and 8% sequentially despite prevalent industry-wide supply-chain challenges. This double-digit year-over-year growth in the top line was mainly driven by strength in the Data Center Group (“DCG”), Automotive, Broadcast and Consumer (“ABC”), Wired and Wireless Group (“WWG”) and Aerospace & Defense, Industrial and Test, Measurement & Emulation (“AIT”) end markets.

The company noted that pursuant to its pending acquisition by Advanced Micro Devices AMD, it will not hold an earnings conference call or issue any outlook. The two companies entered into an agreement in October 2020, under which Advanced Micro Devices agreed to acquire Xilinx in an all-stock transaction worth $35 billion.

Xilinx, Inc. Price and EPS Surprise

Xilinx, Inc. Price and EPS Surprise
Xilinx, Inc. Price and EPS Surprise

Xilinx, Inc. price-eps-surprise | Xilinx, Inc. Quote

Quarter in Detail

Product-wise, advanced product’s revenues climbed 35% year over year, contributing 78% to the total revenues. Moreover, revenues from core products (22% of the total revenues) were up 3% from the year-ago quarter.

On the basis of end markets, ABC revenues (19% of the total revenues) surged 28% year over year while declining 4% quarter over quarter. This year-over-year uptick mainly resulted from the robust performance in the automotive end market.

WWG revenues (23% of the total revenues) increased 1% year over year but declined 18% sequentially.

AIT revenues (46% of the total revenues) jumped 28% on a year-over-year basis and 21% sequentially, chiefly driven by strength across all sub-markets with record performance in the industrial end market and an improvement in the aerospace & defense business.

DCG revenues (11% of the total) grew 81% from the year-ago period and 28% quarter over quarter.

Geographically, XLNX registered an increase of 43% in North America, 13% in the Asia Pacific, 18% in Europe and 53% in Japan on a year-over-year basis. Sequentially, North America and Europe regions registered growth of 40% and 16%, while revenues from Asia and Japan declined 10% and 1%, respectively.

Margins

Non-GAAP gross profit jumped 33% year over year to $736 million, while gross margin contracted 380 basis points (bps) to 72.8%.

The company posted non-GAAP operating income of $340 million during the fiscal third quarter, up 69% from the year-ago quarter. Operating margin expanded 860 bps to 33.6%, chiefly on lower operating expenses as a percentage of revenues and increased gross margin.

Balance Sheet and Cash Flow

Xilinx exited the fiscal third quarter with cash, cash equivalents and short-term investments of $3.70 billion compared with the prior quarter’s $3.42 billion. The company’s total long-term debt (excluding current maturities) was $1.49 billion as of Jan 1, 2022.

Xilinx generated $362.3 million in cash from operations and $350.8 million in free cash flow during the reported quarter. In the first three quarters of fiscal 2022, the company generated operating and free cash flows of $874.3 million and $830.7 million, respectively.

Zacks Rank and Stocks to Consider

Xilinx currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader technology sector include Broadcom AVGO, Advanced Micro Devices and Jabil JBL. While Broadcom sports a Zacks Rank #1 (Strong Buy), Advanced Micro Devices and Jabil each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Broadcom’s first-quarter fiscal 2022 earnings has been revised upward by 8.1% to $8.15 per share over the past 60 days. For fiscal 2022, earnings estimates have moved upward by 6.5% to $33.03 per share over the past 60 days.

Broadcom’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 1.4%. Shares of AVGO have rallied 23.3% in the trailing 12 months.

The Zacks Consensus Estimate for Advanced Micro Devices’ first-quarter 2022 earnings has been revised upward by a penny to 68 cents per share over the past 30 days. For 2022, earnings estimates have moved upward by a penny to $3.32 per share in the past seven days.

Advanced Micro Devices’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 14%. AMD stock has rallied 26.5% over the past year.

The Zacks Consensus Estimate for Jabil’s second-quarter fiscal 2022 earnings has been revised upward to $1.47 per share from $1.41 60 days ago. For fiscal 2022, earnings estimates have been revised upward by 25 cents to $6.58 per share in the past 60 days.

Jabil’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 18.1%. Shares of JBL have rallied 38.7% over the past year.


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