What happened Shares of South Korean semiconductor manufacturer MagnaChip Semiconductor (NYSE: MX) jumped out of the gate Monday and are up 4.3% as of 11:30 a.m. EDT after the company crushed its third-quarter earnings report this morning. Heading into the third quarter, analysts had forecast that MagnaChip would earn $0.22 per share on $126.9 million in sales. As it turned out, the company just barely reached that sales target, booking $127 million in revenue. However, MagnaChip took a woodchipper to earnings projections, reporting a per-share profit of $0.42 per share and sending the shares flying. Image source: Getty Images. So what Granted, that was only a pro forma number. Actual earnings when calculated according to generally accepted accounting principles (GAAP) were only $0.23 per share. And MagnaChip's sales inched only up 1.8% year over year in Q3 2021. The company's display solutions sales were especially weak, falling nearly 16% year over year, a fact the company attributed to "limited ... foundry capacity allocation amid global shortages in manufacturing capacities." On the plus side, the company's gross profit margin on those sales grew by more than half to 36.7%, hitting "the highest level reported in the company's history." Now what The really bad news for MagnaChip investors, I fear, is that management says its "supply constraint is expected to persist for the foreseeable future," limiting its ability to grow revenue to which those strong gross margin numbers can be applied. MagnaChip management didn't provide investors guidance on precisely how bad things could look later this year, but analysts are still forecasting a sizable falloff in revenue for the fourth quarter (down 7%) and an even bigger decline in earnings (down more than 40%). 10 stocks we like better than MagnaChip SemiconductorWhen our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and MagnaChip Semiconductor wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of October 20, 2021 Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.Source