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Lam Research (LRCX) Q2 Earnings & Revenues Beat Estimates

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Zacks Equity Research
·4 min read
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Lam Research Corporation LRCX reported second-quarter fiscal 2021 non-GAAP earnings of $6.03 per share, which surpassed the Zacks Consensus Estimate of $5.64. Also, the figure increased 6.3% sequentially.

Adjusted revenues increased 9% sequentially and 33.7% year over year to $3.46 billion. The reported revenues also outpaced the Zacks Consensus Estimate by 3.9%.

The increase was driven by increased investments across varied sectors such as data centers, smartphones, personal computer gaming consoles, IoT and automotive.

During the quarter, the company witnessed strong demand in key electronic categories, including PCs, storage and networking. Also, Lam Research saw broad-based strength in Foundry-Logic spending, including leading-edge nodes. In addition, it saw an increase in NAND demand related to 5G migration, video and new game consoles. It also witnessed persistent Foundry strength in the quarter.

WFE spending for 2020 is estimated in the high-$50 billion range. Moreover, management expects growth across all segments of the market, driven by a recovery in NAND, Foundry/Logic expansion and slight increase in DRAM in 2020.

For 2021, WFE spending is estimated in high $60-$70 billion range, driven by migration to higher layer counts in NAND, strong spending in DRAM and solid momentum in Foundry/Logic.

Lam Research Corporation Price, Consensus and EPS Surprise

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

Top Line in Detail

China, Korea and Taiwan accounted for 35%, 21% and 17% of the company’s total fiscal second-quarter revenues, respectively. On the contrary, Japan, Southeast Asia, the United States and Europe accounted for 10%, 10%, 4% and 3%, respectively.

Operating Details

Non-GAAP gross margin came in at 46.6%, which contracted 90 basis points (bps) sequentially.

Non-GAAP operating expenses were $563 million, reflecting an increase of 7.6% sequentially. However, as a percentage of revenues, the figure contracted 20 bps sequentially to 16.3%.

Adjusted operating margin was 30.3%, down 80 bps sequentially.

Balance Sheet & Cash Flow

At fiscal second quarter-end, cash and cash equivalents, as well as short-term investments decreased to $6.3 billion from $6.6 billion in fiscal first-quarter 2021.

Cash flow from operating activities was $344.6 million, down from $642.5 million in the fiscal first quarter. Capital expenditures were $92.1 million, up from $62.8 million in the fiscal first quarter.

During the quarter, Lam Research paid dividends of $187.9 million.

Guidance

For third-quarter fiscal 2021, Lam Research projects revenues to be $3.7 billion (+/- $200 million). The Zacks Consensus Estimate for the same is pegged at $3.33 billion.

Non-GAAP gross margin is projected at 46% (+/-1%) and non-GAAP operating margin is expected to be 30.5% (+/-1%).

Non-GAAP earnings are projected at $6.55 (+/- 40 cents) per share on a share count of 145 million. The Zacks Consensus Estimate for non-GAAP earnings per share is pegged at $5.64.

Zacks Rank & Stocks to Consider

Currently, Lam Research has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Semtech Corporation SMTC, Sify Technologies Limited SIFY and Microchip Technology Incorporated MCHP, 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 Alphabet, Maxim, and Microchip Technology is currently projected at 12.5%, 20% and 14.9%, respectively.

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Lam Research Corporation (LRCX) : Free Stock Analysis Report

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Sify Technologies Limited (SIFY) : Free Stock Analysis Report

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