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Why Is Semtech (SMTC) Down 1.8% Since the Last Earnings Report?

A month has gone by since the last earnings report for Semtech Corporation SMTC. Shares have lost about 1.8% 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 drivers.

Semtech’s Q1 Earnings Meet Estimates, Revenues Miss

Semtech’s first-quarter fiscal 2018 adjusted earnings per share (EPS) matched the Zacks Consensus Estimate. The company’s top line saw solid growth year over year.

Quarter Details

Net revenue of $144 million was up 10% on a year-over-year basis but lagged the Zacks Consensus Estimate of $146 million.

Signal Integrity Product Group revenues contributed 46% to total revenue. Protection Product, Wireless and Sensing Product, Power and High-Reliability Product groups contributed 28%, 19% and 7% to total revenues, respectively.

Gross margin was 59%, down 83 basis points (bps) year over year. Operating expenses of $66.7 million were up 2% from $65.3 million in the year-ago quarter. Operating margin was 12.7%, increasing 258 basis points year over year. Non GAAP net loss was $18.8 million compared with $14.4 million in the year-ago quarter.

At the end of fiscal first quarter, cash and cash equivalents balance was $281.6 million compared with $297.1 million in the previous quarter. The company has a long-term debt of 222.9 million. Semtech generated $10.4 million in cash from operating activities.

Outlook

For the second quarter of fiscal 2018, Semtech expects GAAP revenues between $147 and $ 157 million and non-GAAP revenues between $150 million and $160 million. The company projects GAAP EPS in the range of $0.20 to $0.26 and non-GAAP EPS in the range of $0.43 to $0.49.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last month as none of them issued any earnings estimate revisions. In the past month, the consensus estimate has shifted upward by 5% due to these changes.

Semtech Corporation Price and Consensus

 

VGM Scores

At this time, the stock has an average Growth Score of 'C', though it is lagging a bit on the momentum front with a 'D'. Following the exact same course, the stock was allocated also a grade of 'D' on the value side, putting it in the bottom 40% 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.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.


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