Lam Research Earnings Preview

Lam Research (Nasdaq: LRCX  ) didn't hit the Street's expectations last quarter, but investors hope that it will rebound this quarter. The company will unveil its latest earnings on Wednesday, Jan. 25. Lam Research designs, manufactures, and markets semiconductor processing equipment used in the fabrication of integrated circuits and are recognized as a major provider of such equipment to the worldwide semiconductor industry.

What analysts say:

• Buy, sell, or hold?: Analysts are bullish on this stock with 11 analysts rating it as a buy and only one rating it as a sell. Analysts like Lam Research better than competitor Novellus Systems overall. Wall Street has warmed to the stock over the past three months, with analysts increasing their endorsement from hold to moderate buy.
• Revenue Forecasts: On average, analysts predict $572.8 million in revenue this quarter. That would represent a decline of 34.2% from the year-ago quarter.
• Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.30 per share. Estimates range from $0.27 to $0.34.

What our community says:
CAPS All-Stars are solidly behind the stock with 95.6% giving it an "outperform" rating. The community at large backs the All-Stars with 93.2% granting it a rating of "outperform." Fools are keen on Lam Research and haven't been shy with their opinions lately, logging 125 posts in the past 30 days. Even with a robust four out of five stars, Lam Research's CAPS rating falls a little short of the community's upbeat outlook.

Management:
Lam Research's profit has risen year over year by an average of 49.3% over the past five quarters. A year-over-year revenue decrease last quarter snaps a streak of three consecutive quarters of revenue increases. The company's gross margin shrank by 5.1 percentage points in the last quarter. Revenue fell 15.6% while cost of sales fell 7.5% to $396.6 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter	Q1	Q4	Q3	Q2
Gross Margin	41.7%	45.0%	46.2%	46.8%
Operating Margin	14.6%	18.9%	24.3%	27.7%
Net Margin	10.6%	16.7%	22.5%	25.5%

One final thing: If you want to keep tabs on Lam Research movements, and for more analysis on the company, make sure you add it to your Watchlist.

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