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Why Applied Materials Stock Just Popped 9%

What happened

Shares of Applied Materials (NASDAQ: AMAT), a producer of equipment for the manufacture of semiconductor chips and solar panels, are soaring in early Friday trading, up 9.2% as of 10:30 a.m. EST.

The reason: earnings.

Last night, Applied Materials ran circles around Wall Street estimates for its fiscal Q4 results, reporting quarterly sales of $3.75 billion and "non-GAAP" profits of $0.80 per share. Street analysts were only looking for $0.76 per share earned on sales of $3.68 billion -- and Applied beat those numbers handily.

Image source: Getty Images.

So what

The news wasn't all terrific. As calculated by generally accepted accounting principles (GAAP), Applied Materials' sales actually declined slightly year over year, and the company's GAAP profits were down 3% at $0.75 per share. Still, these numbers were good enough for an earnings beat. They also showed a significant improvement over full-year results, where profits likewise dropped 3% in comparison to fiscal 2018 -- but sales were down 13%.

Now what

Applied management says it's seeing "a healthy uptick in demand for semiconductor equipment" and expects fiscal Q1 2020 sales to come in around $4.1 billion, with non-GAAP profits of between $0.87 and $0.95 per share. Both those numbers are significantly ahead of Street estimates for Q1 -- $0.74 per share earned on sales of $3.7 billion.

In other words, after beating estimates in Q4, Applied Materials stock looks set to beat expectations again in this quarter as well.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Applied Materials. The Motley Fool has a disclosure policy.


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