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Applied Materials Growth Pattern Continues To Influence Investors

August 23, 2014 | About:



Semiconductor chips are getting speedier, more diminutive, and more multi-functional to cater the ever growing demand of today's mobile technologies. To make this conceivable, wafer designing, and transistor and interconnect fabrication are, no doubt completed at more modest and littler measurements, driving the move from 2D to 3D chip architecture. The worldwide 3D IC business is relied upon to develop from $2.21 billion in 2009 to $6.55 billion in 2016 at a CAGR of 16.9% from 2011 to 2016. The organizations in this business need to effectively adjust their expense budget between capacity stretch and technology enhancement. 3D IC market is still a raw market as it is yet to gain complete recognition with a deeper penetration which will further add on to the market size.

Applied Materials Inc. (AMAT), is the worldwide pioneer in giving inventive equipment, services and software solution to empower the assembling of cutting edge semiconductor, flat panel displays and solar powered photovoltaic products. The company caters to various manufacturers of cell phones, flat screen TV, and solar panel to enable then in churning out world class product at most affordable cost. These customers may use what they manufacture in their own end products or sell the items to other companies for use in advanced electronic components.

Strong Quarter

This week on 14th Aug, the company declared its third quarter result and was quite strong to keep its investors smiling. Net revenue was up by 15% to record $2.27 billion as contrasted to $2.98 billion year over year. Non-GAAP adjusted net income was $349 million, approximately flat sequentially andup 57 percent year over year.

Wall Street anticipates that the Semiconductor Equipment & Materials maker will earn $0.27 for the quarter, which is $0.09 better than last year's profit of $0.18 per share.

AMAT also tops Wall Street's consensus, delivering 16 bullish amazes in the last 20 quarterly checkups. The normal bullish astonishment was $0.03 superior than expected with a scope of $0.01 to $0.08 more than forecasted.

Presently, Applied Materials' revenue has been progressing higher because of solar based supplies and flash memory chips. Research firm Gartner accepts memory chips will push worldwide chip deals higher by 6.7% in 2014. AMAT ought to keep on profiting from the pattern in Q3. Then, solar based interest stays solid, however there are a few headwinds as costs and subsidies fall.

The organization is focused around its methodology and speculations in the regions that have biggest effect for clients while driving enhancements in execution and speed over the organization. With these activities, It has enhanced the operating margins for seven quarters in succession and is presently making significant advancement towards their long haul financial related model.

As per the latest 10-Q, expense of item sold expanded 16.5%, which would appear to be a ton, however looks sensible contrasted with revenue gain of 19.26%. The distinction sent gross margins higher by 23.89% in Q2. In the meantime, working costs really fell by -29.91% which leveraged the bottom line.


For the final quarter of financial year 2014, Applied anticipates that net sales will be more or less flat, in addition to or short 3% as contrasted with the past quarter, and up by give or take 10 percent to 17% from the year-prior period. EPS is relied upon to be in the scope of $0.25 to $0.29, which would be up by pretty nearly 32% to 53% year over year. This viewpoint rejects known charges identified with finished acquisitions and combination expenses of $0.03 for every share. The consensus revenue estimate for Q3 is $2.29 billion versus last year's $1.98 billion.

In general: Industry and fiscal explanation patterns propose a solid quarter for Applied Materials, and solid enough to move beyond the estimated targets.


With demand increasing AMAT's income, the contrast between a penny on one side the consensus or the other will descend to margins. Taking a gander at AMAT income sheet , things are great on this front. The asset report, stock rose at 10.69%. With sales expanding at very nearly twice that rate, it’s a sign that request is overwhelming supply; an alternate in addition that adds up to bottom line. I suggest a buy for this stock.

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