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Why ASML Holding Stock Gained 12.4% Last Month

By Keith Noonan - Updated Oct 7, 2019 at 12:27PM

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The semiconductor sector got a boost from some encouraging developments in the trade war.

What happened

Shares of ASML Holding (ASML -0.18%) climbed 12.4% in September, according to data from S&P Global Market Intelligence. The semiconductor equipment stock benefited from momentum for the broader market and gained ground following the company's presentations at conferences. 

The stock market advanced early in the month following news that the U.S. and China would resume trade negotiations. ASML shares saw some additional positive momentum after the two countries took steps toward reducing trade tensions by exempting certain goods from import regulations and delaying some tariffs. The semiconductor industry has faced substantial pressure from the ongoing trade dispute, and signs of potential progress on a deal coincided with increased bullish sentiment on ASML stock last month.

ASML's logo.

Image source: ASML.

So what

In addition to gains stemming from an improved outlook on the trade front, ASML shares may have also gained ground thanks to presentations given by the company. The stock's most pronounced gains during the month corresponded with its presentations at the Credit Suisse Asian Technology Conference and the Deutsche Bank European TMT Conference, which suggests that investors may have liked what they heard. The Credit Suisse conference took place Sept. 4 to 6, while the Deutsche Bank conference was held on Sept. 5.

Now what

ASML is expected to report third-quarter earnings on Oct. 16 and is guiding for revenue of roughly 3 billion euros ($3.29 billion). Hitting the target would see the business growing sales roughly 7% year over year in the quarter. Research and development expenses are expected to climb roughly 25% to hit 495 million euros, but the company sees gross margin rising to between 43% and 44% as it moves toward its target margin of 50% in the fourth quarter.

ASML trades at roughly 37 times this year's expected earnings and has a dividend yield of roughly 1%.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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ASML Holding N.V. Stock Quote
ASML Holding N.V.
$574.94 (-0.18%) $-1.02

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