Stock to Track: Semtech Corporation (NASDAQ:SMTC)

Semtech Corporation (NASDAQ:SMTC) reported earnings for the three months ended April 2016 on June 01, 2016. The company earned $0.3 per share on revenue of $131.15M. Analysts had been modeling earning per share of $0.27 with $128.38M in revenue.

Semtech Corporation (NASDAQ:SMTC) reported unaudited financial results for its first quarter of fiscal year 2017, which ended May 1, 2016.

  • Quarterly Net Sales of $131.1 Million, Up 11 Percent Sequentially
  • GAAP EPS of $0.11, Up $0.09 or 450 Percent Sequentially
  • Non-GAAP EPS of $0.30, Up $0.13 or 76 Percent Sequentially

Net sales for the first quarter of fiscal year 2017 were $131.1 million, up 11 percent from the fourth quarter of fiscal year 2016 and up 1 percent from the first quarter of fiscal year 2016.

Gross margin, computed in accordance with U.S. generally accepted accounting principles (GAAP), for the first quarter of fiscal year 2017 was 59.9 percent compared to 58.6 percent in the fourth quarter of fiscal year 2016 and 60.3 percent in the first quarter of fiscal year 2016.

GAAP net income for the first quarter of fiscal year 2017 was $6.9 million, or $0.11 per diluted share.  This compares to GAAP net income of $1.2 million or $0.02 per diluted share in the fourth quarter of fiscal year 2016, and GAAP net loss of $0.01 million or $0.00 per diluted share in the first quarter of fiscal year 2016.

GAAP operating results for the fourth quarter of fiscal 2016 reflected an after-tax benefit of $1.8 million as a result of the fair value re-measurement of the Triune Systems earn-out liability.

To facilitate the complete understanding of comparable financial performance between periods, the Company also presents performance results net of certain non-cash items and items that are not considered reflective of the Company’s core results over time.  The Company’s non-GAAP measures of gross margin, net income and earnings per diluted share exclude certain items as described below under “Non-GAAP Financial Measures.”

Second Quarter of Fiscal Year 2017 Outlook

  • Net sales are expected to be in the range of $130 million to $140 million
  • GAAP gross margin is expected to be in the range of 59.6% to 60.2%
  • Non-GAAP gross margin is expected to be in the range of 60.0% to 60.5%
  • GAAP SG&A expense is expected to be in the range of $32.2 million to $33.2 million
  • GAAP R&D expense is expected to be in the range of $25.6 million to $26.6 million
  • Transaction and Integration related expense is expected to be approximately $1.6 million
  • Stock-based compensation expense is expected to be approximately $6.1 million, categorized as follows: $0.5 million cost of sales, $4.1 million SG&A, and $1.6 million R&D
  • Intangible amortization expense is expected to be approximately $6.4 million
  • Interest and other expense is expected to be approximately $2.2 million
  • GAAP tax rate is expected to be in the range of 29% to 31%
  • Non-GAAP tax rate is expected to be in the range of 21% to 23%
  • GAAP earnings per diluted share are expected to be in the range of $0.12 to $0.17
  • Non-GAAP earnings per diluted share are expected to be in the range of $0.30 to $0.36
  • Fully-diluted share count is expected to be approximately 66.0 million shares
  • Capital expenditures are expected to be approximately $8.0 million
  • Depreciation expense is expected to be approximately $5.9 million

Semtech Corporation earnings per share showed a decreasing trend of -57.8% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 156%.Analysts project EPS growth over the next 5 years at 4.65%. It has EPS annual decline over the past 5 fiscal years of -31.1% when sales grew 1.5. It reported 0.8% sales growth, and 0% EPS decline in the last quarter.

The stock is trading at $24.61, up 75.28% from 52-week low of $14.04. The stock trades down -0.61% from its peak of $24.76 and 15.48% above the consensus price target of $28.42. Its volume clocked up at 0.48 million shares which is higher than the average volume of 0.38 million shares. Its market capitalization currently stands at $1.57B.

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