This company in our global 10 stock “Strong Core” portfolio has announced Q3Fy19 results.
Net sales growth declined by 20% (Y-o-Y) to USD 3.5 billion and net profit declined by 51% (Y-o-Y) to USD 0.57 billion. EBIT margin declined by 300 bps on yearly basis due to sharp fall in revenues from semi-conductor segment. However, new geographical regions are showing stronger growth than ever before which is helping this company to report better than expected earnings. Liquid cash stood at USD 3.5 billion
Semi-Conductor industry is going through low demand cycle due to lower sales of smart phones and crypto-currency mining servers. Applied Materials outlook is positive, strong demand for DRAM and OLED screens will drive revenue going ahead. DRAM is a core memory chip used in computer servers, among other devices, while OLED panels are used in screens for smartphones and televisions. Apart from Semi-Conductors, company has also started investing heavily in A.I & other few technological inflections which will boost revenues going ahead.
The company returned USD 724 million to shareholders through USD 528 million in share repurchases and dividends of USD 196 million.
For Q4Fy19, Applied management expects net sales to be approximately USD 3.685 billion, plus or minus USD 150 million. Non-GAAP adjusted diluted EPS is expected to be in the range of USD 0.72 to USD 0.80. Management expects current business headwinds to settle off during H2Fy20.
Applied Materials has a 10% weight in our portfolio.
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