Breaking News

Applied Materials (AMAT) Q3 Earnings & Revenues Top Estimates

By Zacks Investment ResearchStock MarketsAug 15, 2019 10:40PM ET
Applied Materials (AMAT) Q3 Earnings & Revenues Top Estimates
By Zacks Investment Research   |  Aug 15, 2019 10:40PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

Applied Materials Inc. (NASDAQ:AMAT) delivered fiscal third-quarter 2019 non-GAAP earnings of 74 cents per share, which beat the Zacks Consensus Estimate by 4 cents and improved 5.7% sequentially. However, the figure declined 28.8% year over year.

Net sales of $3.562 billion surpassed the Zacks Consensus Estimate of $3.526 billion and were within management’s guided range of $3.375-$3.675 billion. The figure improved marginally 0.6% from the previous quarter but decreased 14.4% from the year-ago quarter.

Year-over-year decline was owing to market uncertainties which in turn led to weak segmental performance. Moreover, softness in semiconductor and display markets on account of slowdown in memory and display customers’ spending was a major headwind.

Nevertheless, the company witnessed solid momentum across United States and Taiwan.

Coming to price performance, Applied Materials has returned 44% on a year-to-date basis, outperforming the industry’s rally of 41%.

Management remains optimistic about the price elasticity of NAND, which is expected to bolster the NAND customer spending in the near term. Further, demand for foundry logic is improving thanks to rising need for specialty nodes in automotive, power, IoT, communications and image sensor markets.

However, management continues to expect overall wafer fab equipment spending in 2019 to be down in the range of mid to high-teens.

Further, the company’s expanding etch footprint bodes well for its semiconductor portfolio. Moreover, its strengthening momentum in conductor etch is aiding it in gaining traction in DRAM and NAND. Additionally, the company remains confident on its focus on research and development activities to develop new products.

Segments in Detail

The Semiconductor Systems Group (SSG) generated $2.27 billion sales in the reported quarter (64% to its net sales), reflecting a decrease 11.8% year over year.

Applied Global Services (AGS) reported sales of $931 million (26% of net sales), which decreased 2.2% from the prior-year quarter.

Sales from the Display segment came in $339 million (10% of net sales), down significantly 45% from the year-ago level.

Revenues by Geography

United States, Europe, Japan, Korea, Taiwan, Southeast Asia and China generated sales of $552 million, $162 million, $556 million, $445 million, $596 million, $134 million and $1.12 billion, contributing 15%, 5%, 16%, 12%, 17%, 4% and 31% of the net sales, respectively.

We note that sales in United States and Taiwan were up 58.6% and 17.8% year over year, respectively. However, Applied Materials witnessed a decline of 27.7%, 20.6%, 22.2%, 18.8% and 32.2% in sales in Europe, Japan, Korea, Southeast Asia and China, respectively.

Operating Results

Non-GAAP gross margin was 44%, contracting 190 bps from the year-ago quarter.

Applied Materials’ adjusted operating expenses as a percentage of net sales expanded 250 bps on a year-over-year basis to 20.9%.

Further, non-GAAP operating margin of 23% in the reported quarter contracted significantly by 440 bps from the prior-year quarter.

Balance Sheet & Cash Flow

As of Jul 28, 2019, cash and cash equivalent balance was $3.01 billion compared with $3.12 billion as of Apr 28, 2019. Inventories were $3.54 billion compared with $3.68 billion in the prior quarter. Accounts receivables improved to $2.37 billion from $2.26 billion in the fiscal second quarter.

The company returned $528 million and $196 million through stock repurchases and cash dividends, respectively.

Notably, Applied Materials generated $787 million, down from $800 million in the previous quarter.


For fourth-quarter fiscal 2019, Applied Materials expects net sales between $3.535 billion and $3.835 billion. The Zacks Consensus Estimate for the same is pegged at $3.68 billion.

Non-GAAP EPS is expected in the range of 72-80 cents. The corresponding Zacks Consensus Estimate is pegged at 76 cents per share.

Zacks Rank & Stocks to Consider

Applied Materials currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader technology sector are Anixter International (NYSE:AXE) , LogMeIn (NASDAQ:LOGM) and Perficient (NASDAQ:PRFT) , each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Anixter, LogMeIn and Perficient is currently projected to be 8%, 5% and 10.8%, respectively.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>

Perficient, Inc. (PRFT): Free Stock Analysis Report

LogMein, Inc. (LOGM): Free Stock Analysis Report

Anixter International Inc. (AXE): Free Stock Analysis Report

Applied Materials, Inc. (AMAT): Free Stock Analysis Report

Original post

Zacks Investment Research
Applied Materials (AMAT) Q3 Earnings & Revenues Top Estimates
Applied Materials (AMAT) Q3 Earnings & Revenues Top Estimates

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email