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What's in Store for Applied Materials (AMAT) in Q1 Earnings?

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·4 min read
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Applied Materials, Inc. AMAT is set to report first-quarter fiscal 2022 results on Feb 16.

For the fiscal first quarter, the company expects net sales of $6.16 billion (+/-$250 million). The Zacks Consensus Estimate for revenues is pegged at $6.17 billion, suggesting year-over-year growth of 19.5%.

The company projects non-GAAP earnings of $1.78-$1.92 per share. The Zacks Consensus Estimate for earnings is pegged at $1.85, indicating growth of 33.1% from the year-ago reported figure.

The company has surpassed the Zacks Consensus Estimate in three of the trailing four quarters and met the same once, the average earnings surprise being 6.34%.

Applied Materials, Inc. Price and EPS Surprise

Applied Materials, Inc. Price and EPS Surprise
Applied Materials, Inc. Price and EPS Surprise

Applied Materials, Inc. price-eps-surprise | Applied Materials, Inc. Quote

Factors to Consider

Applied Materials’ portfolio strength, expanding position in memory and increasing new design wins are likely to have driven the fiscal first-quarter performance.

More clients are expected to have upgraded their equipment, owing to the increasing deployment of 5G in key markets. This, in turn, is likely to have aided the company’s top line in the quarter to be reported.

Growth opportunities across specialty nodes and new nodes ramp across foundry, logic, NAND and DRAM are expected to have benefited the company in the to-be-reported quarter. Inventory reductions across memory and demand elasticity in NAND are likely to have acted as other tailwinds.

The company is anticipated to have witnessed solid customer momentum across automotive and advanced packaging, owing to rising foundry logic spending.

All these factors are expected to have driven sales in the Semiconductor Systems Group segment in the to-be-reported quarter. For first-quarter fiscal 2022, the company’s projection for sales in the segment stands at $4.46 billion, indicating year-over-year growth of 25%. The Zacks Consensus Estimate for the same is pegged at $4.5 billion, suggesting growth of 25.7% from the prior-year quarter’s reported figure.

The growing adoption of IoT, AI and Big Data is expected to have contributed to the fiscal first-quarter performance.

Coming to the Applied Global Services (AGS) segment, the company’s growing 200-millimeter business and solid momentum among long-term service agreements are likely to have driven sales growth in the segment in the quarter under review. For first-quarter fiscal 2022, the company’s projection for AGS sales stands at $1.33 billion, suggesting year-over-year growth of 15%. The consensus mark for the same is pegged at $1.3 billion, indicating year-over-year growth of 15.1%

However, Applied Materials is likely to have continued suffering from sluggishness in its Display and Adjacent Markets segment in the quarter under review. For first-quarter fiscal 2022, the company’s projection for this segment’s sales is at $350 million. The Zacks Consensus Estimate for the same is pegged at $350 million, suggesting a decline of 14.8% from the prior-year quarter’s reported figure.

Uncertainties related to the COVID-19 pandemic are likely to have created headwinds for the company in the soon-to-be-reported quarter.

What Our Model Says

Our proven model conclusively predicts an earnings beat for Applied Materials this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Applied Materials has an Earnings ESP of +0.93% and a Zacks Rank #2.

Stocks to Consider

Here are some stocks to consider as our model shows that these have the right combination of elements to beat on earnings this season.

NetApp NTAP has an Earnings ESP of +2.09% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

NetApp is scheduled to release third-quarter fiscal 2022 results on Feb 23. The Zacks Consensus Estimate for NTAP’s earnings is pegged at $1.28 per share, suggesting an increase of 16.4% from the prior-year reported figure.

Keysight Technologies KEYS has an Earnings ESP of +1.15% and a Zacks Rank #2 at present.

Keysight Technologies is set to report first-quarter fiscal 2022 results on Feb 17. The Zacks Consensus Estimate for KEYS’ earnings is pegged at $1.56 per share, which suggests an increase of 9.1% from the prior-year reported figure.

Zscaler ZS has an Earnings ESP of +2.10% and a Zacks Rank #2 at present.

Zscaler is scheduled to release second-quarter fiscal 2022 results on Feb 24. The Zacks Consensus Estimate for ZS’s earnings is pegged at 11 cents per share, which suggests an increase of 10% from the prior-year reported figure.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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