CMC Materials (NasdaqGS:CCMP) Q4 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

CMC Materials, Inc. (NasdaqGS:CCMP) is scheduled to report Q4 earnings results after markets close for trading on November 11, 2020.

The company is expected to report earnings of $1.75/share on revenue of $281.2 million. The consensus earnings per share (EPS) of $1.75/share is based on a poll of 5 analysts and represents a growth in eps of 4.0% over the same quarter last year, when the company reported earnings of $1.68/share.

The revenue forecast of $281.2 million based on a poll of 5 analysts implies a year-over-year (YoY) growth in revenue of 0.9%. Last year the company reported $278.6 million in revenue for the quarter.

Expected to report EPS growth of 4.0% for Q4, 2020
Metric Expected Prior Year YoY Change
Revenue $281.23 $278.64 0.9%
EPS $1.75 $1.68 4.0%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from CMC Materials, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2020 $1.54 $1.80 16.7% Beat
Q2, 2020 $1.70 $1.75 2.9% Beat
Q1, 2020 $1.61 $1.92 19.6% Beat
Q4, 2019 $1.61 $1.68 4.1% Beat
Q3, 2019 $1.57 $1.59 1.4% Beat
Q2, 2019 $1.58 $1.55 −1.8% Missed
Q1, 2019 $1.43 $1.90 32.9% Beat
Q4, 2018 $1.32 $1.48 12.0% 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 June 30, 2020, the stock price reacted by increasing 4.2%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 6, 2020 $155.14 $161.68 4.2% Increase
May 7, 2020 $121.89 $135.63 11.27% Increase
Feb 6, 2020 $156.71 $160.88 2.66% Increase
Nov 17, 2019 $156.01 $132.59 -15.01% Decrease

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 −2.92, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.92 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

CMC Materials, Inc. is currently trading at $168.82/share, up 5.4% for the day. The company is trading at approximately 97.0% of its 52-week high of $174.87/share. The company’s stock price is up 4.4% since the last earnings report and up 15.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 65.47 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:CCMP Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 57.49 and a forward P/E multiple of 21.88.

CMC Materials, Inc.’s current share price also implies a price-to-book (P/B) multiple of 4.81. The following table summarizes some other key fundamental ratios:

Data as of November 9, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q3
Period End Date June 30, 2020
Stock Price (Current) $168.82
P/E Ratio 57.5x
P/E Ratio (Fwd) 21.9x
PEG Ratio −2.2
Total Debt / Total Capital 19.8%
Levered Free Cash Flow $131.7 million
EV / EBITDA 15.1x

Finbox

CMC Materials, Inc. is a mid-cap stock with a market capitalization of $4.652 billion and a total enterprise value of $5.447 billion. The company operates in the Information Technology sector and the Semiconductors & Semiconductor Equipment industry.

CMC Materials Inc. provides consumable materials to semiconductor manufacturers, and pipeline and adjacent industry customers worldwide. The Electronic Materials segment provides CMP slurries, which are liquid solutions composed of high-purity deionized water, proprietary chemical additives, and engineered abrasives that chemically and mechanically interact with the surface material of the IC device at an atomic level; and CMP pads that are engineered polymeric materials designed to distribute and transport the slurry to the surface of the wafer and distribute it evenly across the wafer. The company’s CMP slurries are used for polishing various materials that conduct electrical signals, including tungsten, copper, tantalum, and aluminum; and various materials that are used in the production of rigid disks and magnetic heads for hard disk drives, as well as used in the dielectric insulating materials that separate conductive layers within logic and memory IC devices. This segment also designs and produces precision polishing and metrology systems to attain near-perfect shape and surface finish on various optical components, such as mirrors, lenses, and prisms. In addition, this segment offers sulfuric, phosphoric, nitric, and hydrofluoric acids, as well as ammonium hydroxide, hydrogen peroxide, isopropyl alcohol, other specialty organic solvents, and various blends of chemicals. The Performance Materials segment provides polymer-based drag-reducing agents for light, medium, and heavy crude oil transmission; wood treatment products, such as solid blocks and concentrated solutions; and precision polishing and metrology systems for advanced optics applications. This segment also provides MR polishing fluids, consumables, and spare and replacement parts, as well as optical polishing services and other customer support services. The company was formerly known as Cabot Microelectronics Corporation. The company was founded in 1999 and is headquartered in Aurora, Illinois.

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