The 10-second takeaway
For the quarter ended April 29 (Q2), Applied Materials beat expectations on both revenue and earnings per share.
Compared to the prior-year quarter, revenue dropped and GAAP earnings per share shrank significantly.
Margins contracted across the board.
Applied Materials reported revenue of $2.54 billion. The 19 analysts polled by S&P Capital IQ foresaw a top line of $2.4 billion on the same basis. GAAP-reported sales were 11% lower than the prior-year quarter's $2.86 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.27. The 21 earnings estimates compiled by S&P Capital IQ anticipated $0.24 per share. GAAP EPS of $0.22 for Q2 were 41% lower than the prior-year quarter's $0.37 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 39.8%, 170 basis points worse than the prior-year quarter. Operating margin was 16.1%, 740 basis points worse than the prior-year quarter. Net margin was 11.4%, 570 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $2.44 billion. On the bottom line, the average EPS estimate is $0.26.
Next year's average estimate for revenue is $9.51 billion. The average EPS estimate is $0.95.
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 2,006 members rating the stock outperform and 105 members rating it underperform. Among 422 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 402 give Applied Materials a green thumbs-up, and 20 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 $14.66.
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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.