Lam Research (LRCX) Q3 Earnings & Revenues Miss Estimates

Lam Research Corporation (LRCX) reported third-quarter fiscal 2020 non-GAAP earnings of $3.98 per share, which missed the Zacks Consensus Estimate of $4.02. Also, the figure decreased 1% sequentially.

Adjusted revenues decreased 3.1% sequentially but increased 2.6% year over year to $2.50 billion. The reported revenues missed the Zacks Consensus Estimate by 5.6%.

Following the weaker-than-expected fiscal third-quarter results, its share price rose 2.1% in after-hours trading.

Top Line in Detail

China, Korea and Taiwan accounted for 32%, 23% and 21% of the company’s total fiscal third-quarter revenues, respectively. On the contrary, Japan, the United States, Europe and Southeast Asia accounted for 10%, 9%, 3% and 2%, respectively.

Lam Research Corporation Price, Consensus and EPS Surprise

 

Lam Research Corporation Price, Consensus and EPS Surprise

Lam Research Corporation price-consensus-eps-surprise-chart | Lam Research Corporation Quote

Operating Details

Non-GAAP gross margin came in at 46.3%, which expanded 60 basis points (bps) sequentially.

Non-GAAP operating expenses were $486.5 million, reflecting an increase of 3.5% sequentially. As a percentage of sales, both research & development expenses and selling, general & administrative costs decreased.

Adjusted operating margin was 26.9%, down 20 bps sequentially. The increase was primarily due to higher-than-expected expenses.

Balance Sheet & Cash Flow

At the end of the fiscal third quarter, cash and cash equivalents, and short-term investments increased to $5.6 billion from $4.9 billion in the fiscal second quarter.

Cash flow from operating activities was $541.4 million, up from $307.9 million in the fiscal second quarter. Capital expenditures were $51.4 million, down from $62.1 million in the fiscal second quarter.

During the quarter, Lam Research paid dividends of $163.5 million.

Guidance

The company did not provide any guidance for the June quarter due to risks and uncertainties related to the COVID-19 crisis.

Zacks Rank & Stocks to Consider

Currently, Lam Research carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader technology sector include Stamps.com Inc. STMP, Fiverr International Lt. FVRR and Wayfair Inc. W, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Stamps.com, Fiverr International and Wayfair is currently projected at 15%, 11.6% and 23%, respectively.

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