Lam Research Pulls Back A Little Ahead Of Earnings Report

Lam Research (LRCX) is set to report earnings after the closing bell on Wednesday. The stock has been on a great run over the past year, gaining over 235% off of its low last March, but the stock has dropped a little over the last two weeks.

The current consensus estimate is for earnings of $6.60 per share and that is 65.8% higher than the $3.98 the company reported in the same quarter last year. Revenue is expected to come in at $3.69 billion and that is up 47.4% from last year.

macro photography of black circuit board
Image Source: Unsplash

Lam Research has seen strong earnings and revenue growth in recent quarters. In the most recent quarterly report earnings jumped 51% over the previous year and revenue jumped 34%. Those figures are significantly higher than the growth rates we’ve seen over the last three years. Earnings have only grown by an average of 4% per year over the last three years while revenue has increased by 1% per year during that same stretch.

While the growth figures are impressive, the profitability measurements may be even more impressive. The return on equity is extremely high at 48.2% and the profit margin is well above average at 26.2%.

Looking at the revenue growth, the profit margin, and the ROE, we see why Lam Research gets a good score on the SMR rating from Tickeron. The company gets a score of 20 in the category and that is one of four positive fundamental indicators on the fundamental screener.

LRCX Tickeron FA Screener.jpg

We see on the screenshot that Lam gets great scores in the Profit vs. Risk rating and the Price Growth rating. It gets a really good score on its valuation rating as well. The only negative marks are in the Outlook rating and the Seasonality Score.

Lam’s P/E ratio is somewhat low compared to other companies in the semiconductor equipment industry. Lam’s trailing P/E is at 30.9 and the forward P/E is 25.3 where the industry averages are 36.6 and 32.9. Lam’s forward PEG ratio is also lower than the industry average at 1.55. The only area where the company is valued slightly higher than the average is the price/book ratio. Lam’s reading is 16.2 and the industry average is only 4.9.

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