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What's in Store for Applied Materials (AMAT) in Q4 Earnings?

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·4-min read
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Applied Materials, Inc. AMAT is set to report fourth-quarter fiscal 2021 results on Nov 18.

For the fiscal fourth quarter, the company expects net sales of $6.33 billion (+/-$250 million). The Zacks Consensus Estimate for revenues is pegged at $6.33 billion, suggesting growth of 35.1% from the year-ago reported figure.

Applied Materials projects non-GAAP earnings of $1.87-$2.01 per share for the quarter under review. The Zacks Consensus Estimate for earnings is pegged at $1.94, indicating growth of 55.2% from the year-ago reported figure.

AMAT surpassed the Zacks Consensus Estimate in all the trailing four quarters, the earnings surprise being 8.05%, on average.

Applied Materials, Inc. Price and EPS Surprise

Applied Materials, Inc. Price and EPS Surprise
Applied Materials, Inc. Price and EPS Surprise

Applied Materials, Inc. price-eps-surprise | Applied Materials, Inc. Quote

Factors to Consider

Applied Materials’ portfolio strength, expanding position in memory and increasing design wins are expected to have driven the fiscal fourth-quarter performance.

More clients are expected to have upgraded their equipment, owing to the increasing deployment of 5G in key markets. This, in turn, is expected to have aided AMAT’s top line in the quarter to be reported.

The growing adoption of IoT, AI and Big Data is expected to have contributed to the fiscal fourth-quarter performance.

Growth opportunities across specialty nodes and new node ramps across foundry, logic, NAND and DRAM are expected to have benefited the company in the to-be-reported quarter. Moreover, inventory reductions across memory and demand elasticity in NAND are anticipated to have acted as tailwinds.

The company is expected to have witnessed solid customer momentum across automotive and advanced packaging, owing to the rising foundry logic spending.

The above-mentioned factors are expected to have driven sales in the Semiconductor Systems Group segment in the to-be-reported quarter. For fourth-quarter fiscal 2021, the company anticipates Semiconductor Systems revenues of $4.6 billion, up 50% year over year. The Zacks Consensus Estimate for the same is pegged at $4.602 billion, suggesting growth of 49.9% from the prior-year quarter’s reported figure.

Coming to the Applied Global Services (“AGS”) segment, the company’s new systems added to its installed base are likely to have driven momentum across the subscription part of AGS in the quarter under review.

For fourth-quarter fiscal 2021, the company anticipates AGS revenues of $1.3 billion, up 18% year over year. The consensus mark for the same is pegged at $1.302 billion, suggesting year-over-year growth of 17.7%

However, sluggishness in the Display and Adjacent Markets is expected to have been an overhang in the quarter-to-be-reported.

For fourth-quarter fiscal 2021, the company projects Display revenues of $400 million. The Zacks Consensus Estimate for the same is pegged at $401 million, indicating a year-over-year decline of 17.3%.

Apart from this, uncertainties related to the COVID-19 pandemic are likely to have been headwinds for the company in the to-be-reported quarter.

What Our Model Says

Our proven model conclusively predicts an earnings beat for Applied Materials this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Applied Materials has an Earnings ESP of +0.52% and a Zacks Rank #2.

Stocks to Consider

Here are some stocks that you may consider as our model shows that these have the right combination of elements to beat on earnings this season.

Macy's M has an Earnings ESP of +9.77% and a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Macy's is set to report third-quarter fiscal 2022 results on Nov 18.. The Zacks Consensus Estimate for earnings is pegged at 31 cents per share, against the loss of 19 cents per share reported in the year-ago quarter.

Agilent Technologies A has an Earnings ESP of +0.61% and a Zacks Rank of 3 at present.

Agilent Technologies is scheduled to release fourth-quarter fiscal 2021 results on Nov 22. The Zacks Consensus Estimate for earnings is pegged at $1.17 per share, which suggests an increase of 19.4% from the prior-year reported figure.

HP Inc. HPQ has an Earnings ESP of +1.89% and a Zacks Rank of 3 at present.

HP is scheduled to release fourth-quarter fiscal 2021 results on Nov 23. The Zacks Consensus Estimate for earnings is pegged at 88 cents per share, suggesting an increase of 41.9% from the prior-year reported figure.


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