KEMET (KEM) Q2 Earnings: What To Expect On Monday

in EARNINGS/INVESTING IDEAS by

KEMET Corporation (NYSE:KEM) is scheduled to report Q2 earnings results before trading commences on November 11, 2019. The company is expected to report earnings of $0.65/share on revenue of $325.0 million. The consensus earnings per share (EPS) of $0.65/share is based on a poll of 3 analysts and represents a decline of -25.3% when compared to the $0.87/share the company reported for the same quarter last year.

The revenue forecast of $325.0 million based on a poll of 3 analysts implies a year-over-year (YoY) decline of -6.9%. Last year the company reported $349.2 million in revenue for the quarter.

Expected to report EPS decline of -$0.22/share for Q2, 2019
Metric Expected Prior Year YoY Change
Revenue $325.00 $349.23 -6.9%
EPS $0.65 $0.87 -25.3%

Earnings Call Trends

Management has managed analyst expectations well historically. The company has exceeded earnings guidance over each of the last 8 tracked quarters.

What are your expectations from KEMET for this earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q1, 2020 $0.73 $0.82 11.6% Beat
Q4, 2019 $0.96 $1.05 8.8% Beat
Q3, 2019 $0.94 $1.07 13.8% Beat
Q2, 2019 $0.60 $0.87 43.8% Beat
Q1, 2019 $0.45 $0.55 22.2% Beat
Q4, 2018 $0.40 $0.45 12.5% Beat
Q3, 2018 $0.35 $0.52 48.6% Beat
Q2, 2018 $0.44 $0.45 2.3% Beat

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to KEMET’s stock price performance? It’s more important for some companies than for others.

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Before” column shows the closing stock price on the day before the earnings report, and the “Price After” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2019, the stock price reacted by increasing by 6.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-01 $20.12 $21.48 6.8% Increase
2019-05-16 $16.58 $18.15 9.5% Increase
2019-01-31 $21.18 $18.31 -13.6% Decline
2018-10-30 $17.75 $21.78 22.7% Increase

Fundamentals And Technical Analysis

KEMET is currently trading at $23.51/share, down -1.1% for the day. The company is trading near its 52-week high of $23.65/share. The company’s stock price is up 16.8% since the last earnings report and up 5.5% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 68.02 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 6.4x and a forward P/E multiple of 8.4x. KEMET’s current share price also implies a price-to-book (P/B) multiple of 2.0x. KEMET pays a dividend of $0.20/share with a dividend yield of around 1%.

The following table summarizes some other key fundamental ratios:

Data as of November 10, 2019
Metric Value
Last Fiscal Period FY2020.Q1
Period End Date June 30, 2019
Stock Price (Current) $23.51
P/E Ratio 6.4x
P/E Ratio (Fwd) 8.4x
PEG Ratio 3.4
Total Debt to Capital (%) 20.4%
Levered Free Cash Flow $14.147 million
Enterprise Value / EBITDA 5.0x

Company Profile: KEMET Corporation

KEMET Corporation is a small-cap stock with a market capitalization of $1.364 billion and a total enterprise value of $1.496 billion. The company operates in the Information Technology sector and Electronic Equipment, Instruments & Components industry.

KEMET Corporation manufactures and sells passive electronic components under the KEMET brand worldwide. The company operates in three segments: Solid Capacitors; Film and Electrolytic; and Electro-Magnetic, Sensors, and Actuators. It offers tantalum, aluminum polymer, and ceramic capacitors; film, paper, and wet aluminum electrolytic capacitors; electromagnetic interference filters; and electro-magnetic compatible materials and devices, piezo materials and actuators, and various types of sensors.

The company serves electronics original equipment manufacturers, electronics manufacturing services providers, and distributors in various industries, including automotive, communications, computer-related, industrial, consumer, military/aerospace, and alternative energy. It sells its products through direct sales force and independent sales representatives. KEMET Corporation was founded in 1919 and is headquartered in Fort Lauderdale, Florida.

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