A month has gone by since the last earnings report for NXP Semiconductors (NXPI). Shares have added about 1.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is NXP due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
NXP Semiconductors reported third-quarter 2024 non-GAAP earnings of $3.45 per share, beating the Zacks Consensus Estimate by 0.58%. The figure declined 7% year over year.
NXPI’s earnings beat the Zacks Consensus Estimate thrice and matched once, with the average surprise being 1.79%.
NXPI’s top line of $3.250 billion was in line with the midpoint of management’s guidance, down 5.4% year over year. The figure missed the Zacks Consensus Estimate of $3.251 billion by 0.04%.
NXPI’s better-than-expected figures in the Communication Infrastructure, Mobile and Automotive end markets were negated by increasing macroeconomic challenges in the Industrial & IoT market.
Revenues from Automotive (56.3% of total revenues) in the third quarter were $1.829 billion, down 3.3% year over year. This figure surpassed the consensus mark of $1.812 billion.
Third-quarter revenues from Mobile (12.5% of total revenues) were $407 million, up 8% year over year. The figure surpassed the consensus mark of $396 million.
Revenues from Communication Infrastructure & Others (13.9% of total revenues) in the third quarter were $451 million, down 19.3% from the year-ago reported figure. This figure surpassed the consensus mark of $417 million.
Revenues from Industrial & IoT (17.3% of total revenues) were $563 million, which declined 7.2% from the year-ago level and lagged the consensus mark of $627 million.
NXPI’s non-GAAP gross profit in the third quarter was $1.892 billion, down 6% year over year. The non-GAAP gross margin contracted 30 basis points (bps) on a year-over-year basis to 58.2%.
For the third quarter, non-GAAP operating income declined 4% year over year to $1.15 billion. However, operating margin expanded 50 bps to 35.5% from the year-ago quarter.
As of Sept. 30, 2024, NXPI’s cash and cash equivalent, and short-term deposit balance were $3.12 billion, down from $3.26 billion as of June 30, 2024.
The long-term debt was $9.683 billion at the end of the quarter under review compared with $9.681 billion at the end of the last reported quarter.
Cash flow from operations was $779 million, up 2.4% from the previous quarter’s levels. The company’s capex investment was $186 million in the reported quarter. NXPI generated a free cash flow of $593 million in the third quarter.
In the third quarter, NXPI made dividend payments of $259 million and repurchased shares worth $305 million.
For fourth-quarter 2024, NXPI expects revenues in the range of $3-$3.2 billion, indicating a decline of 6.9-14% year over year.
NXPI expects adjusted earnings in the band of $2.93-$3.33 per share, suggesting a decline of 11.4-26.6% year over year.
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -19.3% due to these changes.
Currently, NXP has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise NXP has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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