What happened

In response to favorable third-quarter results and upbeat guidance, shares of FormFactor (NASDAQ:FORM), a maker of specialty equipment used to manufacture semiconductors, were up 23% as of 10:40 a.m. EDT on Thursday.

So what

Here's a look at the key numbers from the quarter:

  • Revenue dropped 6% to $135 million. While that's not good in absolute terms, it was slightly ahead of what Wall Street was expecting.
  • Non-GAAP net income was $19.6 million, or $0.26 per share. These numbers were both down more than 20% year over year, but they also were ahead of the consensus estimate among analysts.
BUsinessman Giving two thumbs up

Image source: Getty Images.

Turning to guidance, here's what management expects in the upcoming quarter:

  • Revenue is expected to land between $132 million and $140 million. This range would represent year-over-year growth of 3% at the midpoint. It's also higher than the $131.9 million that Wall Street was expecting.
  • Non-GAAP EPS is expected to land between $0.23 and $0.29. The midpoint of this range represents year-over-year growth of 8%. It's also nicely higher than the $0.23 in EPS that analysts had modeled.

Given the better-than-expected results, favorable guidance, and the fact that FormFactor's stock was down more than 20% since the start of the year, it isn't hard to figure out why bulls are having a good day.

Now what

It's great to see that FormFactor is projecting a return to growth, but this company operates in a very tough industry, and its results will always wax and wane with customer buying patterns. For that reason, I'm content to look elsewhere for more promising investment opportunities

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.