Applied Materials Beats Expectations but Takes a Step Back Anyway

Applied Materials (Nasdaq: AMAT  ) reported earnings on Feb. 16. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Jan. 29 (Q1), Applied Materials beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue dropped significantly and GAAP earnings per share contracted significantly.

Margins contracted across the board.

Revenue details
Applied Materials chalked up revenue of $2.19 billion. The 18 analysts polled by S&P Capital IQ expected a top line of $1.97 billion on the same basis. GAAP reported sales were 19% lower than the prior-year quarter's $2.69 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $0.18. The 21 earnings estimates compiled by S&P Capital IQ forecast $0.12 per share on the same basis. GAAP EPS of $0.09 for Q1 were 76% lower than the prior-year quarter's $0.38 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 35.9%, 640 basis points worse than the prior-year quarter. Operating margin was 8.2%, 1,580 basis points worse than the prior-year quarter. Net margin was 5.3%, 1,350 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $2.40 billion.

Next year's average estimate for revenue is $9.47 billion.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 1,997 members out of 2,098 rating the stock outperform, and 102 members rating it underperform. Among 502 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 484 give Applied Materials a green thumbs-up, and 18 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Applied Materials is outperform, with an average price target of $13.42.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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