STMicroelectronics Stock Gains On Q2 Earnings Beat, Robust Q3 Guidance

STMicroelectronics NV (STM) reported second-quarter FY21 revenue growth of 43.4% year-on-year to $2.99 billion, beating the analyst consensus of $2.89 billion.

The company recorded higher net sales in all product groups except the RF Communications sub-group. 

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Sales to OEMs increased 38.4%, Distribution sales improved 53.1% Y/Y.

Automotive and Discrete Group (ADG) revenue rose 48% Y/Y to $1.08 billion. The segment operating margin jumped 720 bps to 9.5%. 

Analog, MEMS, and Sensors Group (AMS) revenue increased 62.3% Y/Y to $1.01 billion. The segment operating margin improved 960 bps to 18.6%.

Microcontrollers and Digital ICs Group (MDG) revenue grew 22.4% Y/Y to $897 million. The segment operating margin increased 700 bps to 22.9%.

The gross margin expanded 550 bps to 40.5%. Lower unloading charges, manufacturing efficiencies, favorable pricing, and improved product mix drove the margins partially offset by adverse currency effects, net of hedging.

The operating margin expanded by 1,120 bps to 16.3%. EPS of $0.44 beat the analyst consensus of $0.37. STMicroelectronics generated $602 million in operating cash flow and held $4.25 billion in cash and equivalents.

The company paid cash dividends of $52 million and bought back shares worth $156 million, completing its $750 million share repurchase program launched on Nov. 5, 2018.

On Jul. 1, it launched a new share buy-back program of up to $1.04 billion to be executed within three years. 


STMicroelectronics sees Q3 mid-point revenue of $3.2 billion, above the analyst consensus of $3.08 billion, and expects a gross margin of 41%. For FY21, It expects revenues of $12.4 billion to $12.6 billion.

Analyst Rating: Last week, Goldman Sachs analyst Alexander Duval upgraded STMicroelectronics to Neutral from Sell with a €34 price target.

Price Action: STM shares traded higher by 6.0% at $41.69 in the premarket session on the last check Thursday.

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