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Why NXP Semiconductors Stock Jumped 10% This Morning

Anders Bylund, The Motley Fool

What happened

Shares of NXP Semiconductors (NASDAQ: NXPI) rose as much as 10% on Tuesday morning, following the release of the chipmaker's first-quarter results. Later, the stock closed out Tuesday's trading at a 7.9% increase.

So what

In the first quarter of 2019, NXP collected $2.10 billion of top-line earnings and posted a GAAP net loss of $0.07 per diluted share. Analysts had been expecting adjusted earnings of about $1.55 per share on sales near $2.09 billion. The company did not provide a direct equivalent to adjusted earnings per share, but doing the math on its adjusted operating income and income tax rates, it's possible to arrive at a figure in the neighborhood of $1.60 per share.

Two hands in front of an uncut wafer of semiconductor silicon, one giving the thumbs-up and the other doing a thumbs-down.

Image source: Getty Images.

Now what

Perhaps more to the point, NXP presented these figures with a side of optimistic guidance. The midpoint of management's second-quarter revenue guidance stopped 2.3% above the current Street consensus. Gross margins are also trending upward, pointing to improved bottom-line profits somewhere down the line. And beyond that, CEO Rick Clemmer said that the downturn NXP is slogging through at the moment should abate in the second half of 2019. Clemmer made it clear that political and macroeconomic surprises could undermine that optimistic forecast, but he generally sees good times ahead.

NXP's shares are trading almost exactly where they were a year ago thanks to a 42% gain in the last six months. It's no surprise to see investors welcoming another solid earnings report with open arms.

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Anders Bylund owns shares of NXP Semiconductors. The Motley Fool recommends NXP Semiconductors. The Motley Fool has a disclosure policy.