Lam Research (LRCX) exited with quarterly earnings of $7.40 per share, missing Zacks consensus estimate of $7.48 per share. That compares to earnings of $7.49 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents a profit surprise of -1.07%. A quarter ago, this semiconductor equipment maker was expected to post a profit of $8.46 per share when it actually produced a surprise profit of $8.53. by 0.83%.
In the past four quarters, the company has exceeded consensus EPS estimates three times.
The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.
Lam Research shares have lost about 33.4% year-to-date versus a -6.4% decline for the S&P 500.
What’s next for Lam Research?
While Lam Research has underperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?
There is no easy answer to this key question, but a reliable measure that can help investors answer it is the company’s earnings outlook. This includes not only current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.
Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Before this publication of the results, the trend of revisions of estimates for Lam Research: mixed. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a No. 3 (hold) Zacks ranking for the stock. Thus, the shares should move in line with the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $8.06 on $4.44 billion in revenue for the upcoming quarter and $32.56 on $17.2 billion in revenue for the current fiscal year.
Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, Semiconductor Equipment – Wafer Fabrication is currently in the bottom 9% of over 250 Zacks industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.
Another stock in the same sector, Applied Materials (AMAT), has yet to report results for the quarter ending April 2022.
The chip-making equipment maker is expected to post quarterly earnings of $1.89 per share in its next report, representing a year-over-year change of +16%. The consensus EPS estimate for the quarter has been revised down 0.6% in the past 30 days from the current level.
Applied Materials revenue is expected to be $6.35 billion, up 13.8% from the year-ago quarter.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.