MACOM Technology Solutions Q4 Earnings: Can NasdaqGS:MTSI Hit Its $0.38 EPS Target?

in EARNINGS/INVESTING IDEAS by

MACOM Technology Solutions Holdings, Inc. (NasdaqGS:MTSI) is scheduled to report Q4 earnings results after markets close for trading on November 5, 2020.

The company is expected to report earnings of $0.38/share on revenue of $146 million. The consensus earnings per share (EPS) of $0.38/share is based on a poll of 13 analysts and represents a growth in eps of 3,692.3% over the same quarter last year, when the company reported earnings of $0.01/share.

The revenue forecast of $146 million based on a poll of 12 analysts implies a year-over-year (YoY) growth in revenue of 30.1%. Last year the company reported $112.2 million in revenue for the quarter.

Expected to report EPS growth of 3,692.3% for Q4, 2020
Metric Expected Prior Year YoY Change
Revenue $145.99 $112.25 30.1%
EPS $0.38 $0.01 3,692.3%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, missed 1 quarter, and met expectations 3 quarters.

What are your expectations from MACOM Technology Solutions Holdings, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2020 $0.21 $0.33 55.6% Beat
Q2, 2020 $0.10 $0.17 68.6% Beat
Q1, 2020 $0.03 $0.07 115.7% Beat
Q4, 2019 -$0.02 $0.01 145.0% Beat
Q3, 2019 -$0.42 -$0.42 0% Met
Q2, 2019 -$0.17 -$0.18 -6.0% Missed
Q1, 2019 $0.20 $0.20 0% Met
Q4, 2018 $0.16 $0.16 0% Met

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 July 3, 2020, the stock price reacted by increasing 19.6%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $36.28 $43.40 19.6% Increase
April 29, 2020 $26.63 $30.66 15.2% Increase
January 28, 2020 $27.20 $30.72 12.9% Increase
November 12, 2019 $23.45 $26.49 13.0% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.21, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.21 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

MACOM Technology Solutions Holdings, Inc. is currently trading at $33/share, down −5.2% for the day. The company is trading at approximately 74.3% of its 52-week high of $44.69/share. The company’s stock price is down −24.0% since the last earnings report and down −5.9% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 48.43 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:MTSI Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −41.60 and a forward P/E multiple of 35.15.

MACOM Technology Solutions Holdings, Inc.’s current share price also implies a price-to-book (P/B) multiple of 8.08. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q3
Period End Date July 3, 2020
Stock Price (Current) $33
P/E Ratio −41.6x
P/E Ratio (Fwd) 35.2x
PEG Ratio −0.5
Total Debt / Total Capital 23.8%
Levered Free Cash Flow $70.701 million
EV / EBITDA 42.1x

Finbox

MACOM Technology Solutions Holdings, Inc. is a mid-cap stock with a market capitalization of $2.328 billion and a total enterprise value of $2.792 billion. The company operates in the Information Technology sector and the Semiconductors & Semiconductor Equipment industry.

MACOM Technology Solutions Holdings, Inc., together with its subsidiaries, designs and manufactures analog radio frequency (RF), microwave, millimeterwave, and lightwave spectrum products in the United States, China, the Asia Pacific, and internationally. The company offers a portfolio of standard and custom devices, including integrated circuits, multi-chip modules, power pallets and transistors, diodes, amplifiers, switches and switch limiters, passive and active components, and subsystems. Its semiconductor products are electronic components that are incorporated in electronic systems, such as wireless basestations, high density networks, active antenna arrays, radar, magnetic resonance imaging systems, and test and measurement. The company serves various markets comprising telecommunication that includes carrier infrastructure, which comprise long-haul/metro, 5G, and fiber-to-the-X/PON; data centers; and industrial and defense, including military and commercial radar, RF jammers, electronic countermeasures, and communication data links, as well as multi-market applications, such as industrial, medical, test and measurement, and scientific applications. It sells its products through direct sales force, applications engineering staff, independent sales representatives, resellers, and distributors. The company was founded in 1950 and is headquartered in Lowell, Massachusetts.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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