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Maxim (MXIM) Up 6.9% Since Last Earnings Report: Can It Continue?

·3 min read

It has been about a month since the last earnings report for Maxim Integrated Products (MXIM). Shares have added about 6.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Maxim 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.

Maxim Q3 Earnings and Revenues Surpass Estimates

Maxim Integrated Products reported third-quarter fiscal 2021 adjusted earnings of 82 cents per share, which beat the Zacks Consensus Estimate by 9.3%. The figure increased 34.4% year over year and 12.3% on a sequential basis.

Revenues of $665.03 million outpaced the Zacks Consensus Estimate of $641 million. Also, the top line increased 18% year over year and 6% on a sequential basis.

Top-line growth was primarily driven by the company’s strong performance across the automotive and industrial markets.

Notably, Analog Devices announced plans to acquire Maxim last year. In the latest quarterly release, Maxim stated that it is proceeding well toward the deal closure.

End-Market in Detail

Industrial: The company generated 33% of total revenues from the market in the reported quarter. Revenues in the market advanced 28% from the prior-year quarter.

Automotive: The market accounted for 30% of fiscal third-quarter revenues. Revenues from the market were up 30% on a year-over-year basis.

Consumer: Maxim generated 20% revenues from the market. Revenues in the market were up 24% year over year.

Communications and Data Center: Revenues from the market, which now includes computing, accounted for 16% of the total revenues. Revenues from the market declined 13% from the year-ago quarter.

Operating Details

Non-GAAP gross margin was 67.4%, which expanded 130 basis points (bps) from the year-ago quarter.

Non-GAAP operating expenses were $185.8 million, which increased 2.8% year over year.

Operating margin was 37.2%, which expanded460 bps from the year-ago quarter.

Balance Sheet & Cash Flow

As of Mar 27, 2021, cash, cash equivalents and short-term investments were $2.03 billion, up from $1.8 billion as of Dec 26, 2020.

Long-term debt was $995.1 million at the fiscal third-quarter end compared with $994.7 million at the second-quarter end.

For the quarter under review, cash flow from operations was $271 million, up from $210 million in the prior quarter. Further, the company utilized $16 million for capital expenditure in the fiscal third quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 8.01% due to these changes.

VGM Scores

At this time, Maxim has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Maxim has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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