Lam Research (LRCX) Q2 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Lam Research Corporation (NASDAQGS:LRCX) is scheduled to report Q2 earnings results on January 29, 2020.

The company is expected to report earnings of $3.83/share on revenue of $2.5 billion. The consensus earnings per share (EPS) of $3.83/share is based on a poll of 19 analysts and represents a decline of -1.1% over the same quarter last year when the company reported earnings of $3.87/share.

The revenue forecast of $2.5 billion based on a poll of 19 analysts implies a year-over-year (YoY) decline of -0.9%. Last year the company reported $2.523 billion in revenue for the quarter.

Expected to report EPS decline of -$0.04/share for Q2, 2019
Metric Expected Prior Year YoY Change
Revenue $2,500.35 $2,522.67 -0.9%
EPS $3.83 $3.87 -1.1%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

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

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q1, 2020 $3 $3.18 6.0% Beat
Q4, 2019 $3.40 $3.62 6.5% Beat
Q3, 2019 $3.40 $3.70 8.8% Beat
Q2, 2019 $3.65 $3.87 6.0% Beat
Q1, 2019 $3.20 $3.36 5.0% Beat
Q4, 2018 $5 $5.31 6.2% Beat
Q3, 2018 $4.35 $4.79 10.1% Beat
Q2, 2018 $3.65 $4.34 18.8% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” 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 September 29, 2019, the stock price reacted by increasing by 13.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-23 $234.91 $265.60 13.1% Increase
2019-07-31 $211.32 $205.76 -2.6% Decline
2019-04-24 $194.78 $205.08 5.3% Increase
2019-01-23 $139.89 $161.20 15.2% Increase

Fundamentals And Technical Analysis

Lam Research is currently trading at $310.26/share, up 0.7% for the day. The company is trading at approximately 100.0% of its 52-week high of $308.49/share. The company’s stock price is up 16.8% since the last earnings report and up 3.2% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 69.75 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

NASDAQGS:LRCX Stock Price Chart Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 21.0x and a forward P/E multiple of 19.6x. Lam Research’s current share price also implies a price-to-book (P/B) multiple of 9.1x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2020.Q1
Period End Date September 29, 2019
Stock Price (Current) $310.26
P/E Ratio 21.0x
P/E Ratio (Fwd) 19.6x
PEG Ratio 1.2
Total Debt to Capital (%) 9.2%
Levered Free Cash Flow $2.633 billion
Enterprise Value / EBITDA 16.1x

Source: Finbox

Company Profile: Lam Research Corporation

Lam Research Corporation is a large-cap stock with a market capitalization of $44.684 billion and a total enterprise value of $43.635 billion. The company operates in the Information Technology sector and the Semiconductors & Semiconductor Equipment industry.

Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits worldwide.

The company offers ALTUS systems to deposit conformal films for tungsten metallization applications; SABRE electrochemical deposition product for copper damascene manufacturing; SOLA ultraviolet thermal processing products for film treatment; SPEED gap-fill high-density plasma chemical vapor deposition (CVD) products; Striker single-wafer atomic layer deposition (ALD) products; and VECTOR plasma-enhanced CVD ALD products. It also provides Flex for dielectric etch applications; Kiyo for conductor etch applications; Syndion for through-silicon via etch applications; and Versys metal products for metal etch processes.

In addition, the company offers Coronus bevel clean products to enhance die yield; Da Vinci, DV-Prime, EOS, and SP to address a range of wafer cleaning applications; and Metryx mass metrology systems for high precision in-line mass measurement in semiconductor wafer manufacturing.

The company was founded in 1980 and is headquartered in Fremont, California.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.