Shares of Applied Materials Inc. AMAT rose $2.28 (or 4%) to a price of $59.24 per unit in after-hours trading Thursday after beating consensus estimates on earnings and revenue for the fourth quarter of fiscal 2019.
The U.S. provider of equipment, services and software posted pro forma earnings per diluted share of 80 cents, which was down nearly 6% year over year but beat estimates by 4 cents.
Fourth-quarter revenue came in at $3.75 billion, topping projections by $70 million. The top line was flat compared to the prior-year quarter.
By segment, Applied Materials recorded the following year over year changes: Semiconductor Systems gained 2.5% to reach $2.3 billion in revenue, Applied Global Services revenue came in flat at $977 million and Display and Adjacent Markets revenue fell 12.1% to $457 million.
For the first quarter of fiscal 2020, Applied Materials targest revenue of $3.95 billion to $4.25 billion, which is significantly above analysts’ projections of $3.74 billion. The company’s expectations on pro forma earnings per diluted share of 87-95 cents are also higher than consensus estimates of 74 cents. There is a chance that this better-than-expected company guidance on earnings and revenue anticipations for the next quarter has helped increase the share price in extended hours.
“Applied Materials’ fourth-quarter results reflect a healthy uptick in demand for semiconductor equipment, combined with strong execution across the company,” president and CEO Gary Dickerson said. “The semiconductor industry is increasingly adopting a new playbook for improving chip performance, power, area and cost, and we are investing in unique solutions to enable our customers’ success in the AI-Big Data era.”
Applied Materials also updated its shareholders with fresh data on the entire year of fiscal 2019. These are the highlights: revenue of $14.61 billion marked a 12.6% drop from full fiscal year 2018, while a pro forma gross margin rate of 44% of net sales marked a 210 basis points decline. The pro forma operating income of $3.43 billion was down from the year-ago $5 billion.
Additionally, though 14.2% lower than the prior year, the operating cash flow of $3.25 billion was still enough to pay 21 cents quarterly dividends per common share on Sept. 12 for a total of $771 million and buy back 60 million ordinary shares of its own stock for $2.4 billion.
The share price of Applied Materials has risen 74% so far this year to close at $56.96 on Thursday for a market capitalization of $52.62 billion.
The 52-week range is $28.79 to $57.39. The stock has a forward dividend yield of 1.47% as of Nov. 14.
The stock has an overweight recommendation rating and an average target share price of $60.27 in Wall Street.
Disclosure: I have no positions in any security mentioned.
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