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Why FormFactor, Inc. Is Soaring Today

By Brian Feroldi – Updated May 4, 2017 at 5:56AM

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Better-than-expected quarterly results mixed with a bullish outlook cause FormFactor's stock to jump.

What happened

In response to upbeat first-quarter results and a bullish guidance, shares of FormFactor (FORM 1.34%), a supplier to the semiconductor industry, rose by 21% as of 11:20 a.m. EDT on Thursday.

So what

Here's a review of the headline numbers that caused shares to jump:

  • Revenue rose 140% to $128.8 million. The massive growth was mostly owed to last year's Cascade Microtech acquisition. This figure came in above the high end of management's guidance range and also topped Wall Street's expectations.
  • Non-GAAP net income $17.3 million, or $0.24 per share. This figure was also comfortably ahead of the company's guidance range and easily surpassed the $0.20 in earnings per share that market watchers had projected.
  • FormFactor generated $13 million in cash during the quarter, which is a nice turnaround compared to the same quarter last year, when it actually consumed $0.4 million in cash. 

FormFactor CEO Mike Slessor credited the company's strong performance to "robust demand from all our customers."

A businessman with a stack of dollar bills fanned out in his hand

Image source: Getty Images.

He also stated that growing demand for data centers, mobile devices, and high-tech automobiles is driving increased business for semiconductor equipment. As a result, the company provided investors with the following bullish guidance for the upcoming quarter:

  • Revenue between $130 million and $138 million
  • Non-GAAP EPS between $0.24 and $0.30

By contrast, analysts were only expecting $127 million in revenue and $0.23 in EPS. 

The positive quarterly results and upbeat guidance caused FormFactor's stock to soar. 

Now what

With the Cascade Microtech acquisition complete, FormFactor now believes that its market share in the advanced probe card market is over 30%. That company believes that is more than double the market share held by competitors such as Advantest. Management believes that the company's increased scale and diversification are helping to smooth out its cyclicality and drive revenue and margin expansion.

Looking ahead, FormFactor looks well positioned to drive continued revenue, margin, and profit growth from here. With the company firing on all cylinders, it is easy to understand why traders are feeling bullish about its future.

Brian Feroldi has no position in any stocks mentioned. The Motley Fool recommends FormFactor. The Motley Fool has a disclosure policy.

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