Yahoo Finance Why Is Qorvo (QRVO) Up 1.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Qorvo (QRVO). Shares have added about 1.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Qorvo due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Qorvo Beats Q4 Earnings Estimates on Solid Revenues
Qorvo reported strong fourth-quarter fiscal 2024 results, with the bottom and the top line beating the respective Zacks Consensus Estimate. The company reported healthy top-line expansion year over year, backed by solid demand trends in multiple end markets, including defense, aerospace, power management, WI-FI, smartphone and automotive.
Net Income
On a GAAP basis, the company reported a net income of $2.7 million or 3 cents per share against a net loss of $138.4 million or a loss of $1.39 per share in the prior-year quarter. The significant improvement was primarily attributable to top-line growth.
Non-GAAP net income was $135.5 million or $1.39 per share, up from $25.7 million or 26 cents per share in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimates by 18 cents.
For fiscal 2024, Qorvo reported a GAAP loss of $70.3 million or a loss of 72 cents per share against a net income of $103.1 million or $1.00 per share.
Revenues
Net sales during the quarter rose to $941 million from $632.7 million in the prior-year quarter. Solid sales growth in the Connectivity and Sensors Group (CSG), High-Performance Analog (HPA) and Advance Cellular Group (ACG) business supported the revenue growth during the quarter. The company is at the forefront of global secular macro trends, including mobility, connectivity, electrification and datafication that are enabling new applications and new user experiences. The top line beat the Zacks Consensus Estimate of $925 million.
For fiscal 2024, total revenues were $3.8 billion compared with $3.6 billion in fiscal 2023.
HPA contributed $164.6 million in revenues, up from $133.1 million in the year-ago quarter largely driven by improved performance in the defense business. The company secured new product orders for several large domestic and international ground-based radar systems. The transition from legacy mechanical systems to active electronics scanning systems is driving growth in the defense and aerospace business.
In power management, the company continues to boast a strong presence in the consumer electronic sector. Healthy traction in automotive also cushioned the top line. Growing demand for DOCSIS 4.0 hybrid power doublers is supporting growth in the infrastructure business.
Revenues from CSG were $122.8 million compared with $81.9 million in the year-earlier quarter. The improvement is driven by the growing adoption of WI-FI 7 across operator, retail, enterprise and mobile segments. Solid ultra-wideband demand across various end markets, including automotive, laptop trackpads, wearables and smartphones, also supported the top line in this segment.
Net sales in ACG were $653.6 million, up 56.5% year over year, supported by strong content on multiple large customer platforms.
Other Details
Non-GAAP gross profit rose to $400.4 million from $261.2 million, with respective margins of 42.5% and 41.3%. Non-GAAP operating expenses increased to $253.2 million from $227.3 million a year ago, owing to higher investments in new product development. Non-GAAP operating income was $147.2 million, up from $33.8 million in the year-ago quarter.
Cash Flow & Liquidity
As of Mar 31, 2024, QRVO had $1.03 billion in cash and cash equivalents with $1.55 billion of long-term debt compared with respective tallies of $808.8 million and $2.05 billion in the prior-year period. The company generated $202.3 million in net cash from operating activities, with a free cash flow of $169.6 million. Qorvo repurchased $100 million worth of shares at an average price of $112 in the quarter.
Outlook
For first-quarter fiscal 2025, the company expects revenues at about $850 million (+/- $25 million). Non-GAAP gross margin is projected between 40% and 41%. Non-GAAP earnings per share are likely to be within 60-80 cents.
Qorvo expects modest revenue growth and margin improvement in fiscal 2025 year over year. Management is also undertaking various productivity enhancement initiatives across the enterprise to boost profitability.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -57.07% due to these changes.
VGM Scores
At this time, Qorvo has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Qorvo has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Qorvo is part of the Zacks Semiconductors - Radio Frequency industry. Over the past month, Skyworks Solutions (SWKS), a stock from the same industry, has gained 1.1%. The company reported its results for the quarter ended March 2024 more than a month ago.
Skyworks reported revenues of $1.05 billion in the last reported quarter, representing a year-over-year change of -9.3%. EPS of $1.55 for the same period compares with $2.02 a year ago.
Skyworks is expected to post earnings of $1.24 per share for the current quarter, representing a year-over-year change of -28.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -4.9%.
Skyworks has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Qorvo, Inc. (QRVO) : Free Stock Analysis Report
Skyworks Solutions, Inc. (SWKS) : Free Stock Analysis Report
