The 10-second takeaway
For the quarter ended Oct. 28 (Q3), Semtech beat expectations on revenues and crushed expectations on earnings per share.
Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share contracted significantly.
Gross margins increased, operating margins dropped, net margins dropped.
Semtech notched revenue of $160.9 million. The seven analysts polled by S&P Capital IQ foresaw sales of $151.7 million on the same basis. GAAP reported sales were 30% higher than the prior-year quarter's $123.9 million.
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 $0.53. The eight earnings estimates compiled by S&P Capital IQ predicted $0.43 per share. GAAP EPS of $0.25 for Q3 were 38% lower than the prior-year quarter's $0.40 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 60.2%, 100 basis points better than the prior-year quarter. Operating margin was 12.2%, 1,010 basis points worse than the prior-year quarter. Net margin was 10.3%, 1,150 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $151.9 million. On the bottom line, the average EPS estimate is $0.42.
Next year's average estimate for revenue is $571.2 million. The average EPS estimate is $1.54.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 91 members out of 101 rating the stock outperform, and 10 members rating it underperform. Among 31 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 29 give Semtech a green thumbs-up, and two give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Semtech is outperform, with an average price target of $32.00.
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