Margin news is mixed, with gross and operating margins moving in oppositive directions, but the net results are relatively flat compared to last year. The salient point is that GAAP earnings of $3.24 are up 150 bps from last year due to margin resilience, outpacing the top-line growth and $0.06 ahead of the consensus. The strength plays into the guidance, which forecasts top and bottom-line strength relative to the analysts' estimates.
The guidance is favorable despite the expectation for a 5% YOY contraction in revenue. The projected $3.125 billion mid-point is ahead of the analysts' consensus, and the top end of the range allows for significant outperformance. The bottom line is also expected to be strong at $3.20 compared to $3.07.
NXP Semiconductors generates ample cash flow, with the free cash flow running at 20% of the revenue in Q1. Capital returns in Q1 amounted to 90% of the free cash flow and are expected to remain solid through year-end. The Q1 payout annualizes to over 1.6% and is compounded by share buybacks. Repurchases effectively doubled the dividend yield in Q1 and helped to reduce the average share count by nearly 1%.
The price action in NXPI stock is showing a trend-following signal. The rebound began a week before the earnings release, with the market advancing from the 150-day EMA. The market is wrestling with resistance at an all-time high now but is indicated higher by the stochastic. A move to new highs would trigger a buy signal in the MACD, raising the strength of the signal from buy to strong buy. In that scenario, this stock could increase to the $300 region by fall, possibly higher if the analysts continue raising their targets.
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Get This Free ReportCompany | MarketRankâ„¢ | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
---|---|---|---|---|---|---|---|
Texas Instruments (TXN) | 4.9209 of 5 stars | $184.99 | -0.4% | 2.94% | 33.88 | Hold | $211.40 |
Analog Devices (ADI) | 4.8779 of 5 stars | $227.82 | 0.6% | 1.74% | 62.08 | Moderate Buy | $258.89 |
NXP Semiconductors (NXPI) | 4.9133 of 5 stars | $223.29 | -0.5% | 1.82% | 26.61 | Moderate Buy | $256.05 |
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