Yahoo Finance Don't Overlook Applied Materials (AMAT) International Revenue Trends While Assessing the Stock
Did you analyze how Applied Materials (AMAT) fared in its international operations for the quarter ending April 2024? Given the widespread global presence of this maker of chipmaking equipment, scrutinizing the trends in international revenues becomes imperative to assess its financial strength and future growth possibilities.
In the modern, closely-knit global economic landscape, the capacity of a business to access foreign markets is often a key determinant of its financial well-being and growth path. Investors now place great importance on grasping the extent of a company's dependence on international markets, as it sheds light on the firm's earnings stability, its skill in leveraging various economic cycles and its broad growth potential.
International market involvement serves as insurance against economic downturns at home and enables engagement with economies that are growing more quickly. Still, this move toward diversification is not without its challenges, as it involves navigating through the fluctuations of currencies, geopolitical threats, and the distinctive nature of various markets.
Upon examining AMAT's recent quarterly performance, we noticed several interesting patterns in the revenue generated from its international segments, which are commonly analyzed and observed by Wall Street experts.
The company's total revenue for the quarter amounted to $6.65 billion, showing rise of 0.2%. We will now explore the breakdown of AMAT's overseas revenue to assess the impact of its international operations.
Decoding AMAT's International Revenue Trends
China accounted for 42.6% of the company's total revenue during the quarter, translating to $2.83 billion. Revenues from this region represented a surprise of +26.9%, with Wall Street analysts collectively expecting $2.23 billion. When compared to the preceding quarter and the same quarter in the previous year, China contributed $3 billion (44.7%) and $1.41 billion (21.2%) to the total revenue, respectively.
Of the total revenue, $213 million came from Southeast Asia during the last fiscal quarter, accounting for 3.2%. This represented a surprise of +25.21% as analysts had expected the region to contribute $170.11 million to the total revenue. In comparison, the region contributed $186 million, or 2.8%, and $157 million, or 2.4%, to total revenue in the previous and year-ago quarters, respectively.
Japan generated $453 million in revenues for the company in the last quarter, constituting 6.8% of the total. This represented a surprise of -15.56% compared to the $536.49 million projected by Wall Street analysts. Comparatively, in the previous quarter, Japan accounted for $565 million (8.4%), and in the year-ago quarter, it contributed $460 million (6.9%) to the total revenue.
During the quarter, Europe contributed $289 million in revenue, making up 4.4% of the total revenue. When compared to the consensus estimate of $491.26 million, this meant a surprise of -41.17%. Looking back, Europe contributed $410 million, or 6.1%, in the previous quarter, and $477 million, or 7.2%, in the same quarter of the previous year.
Of the total revenue, $1.02 billion came from Taiwan during the last fiscal quarter, accounting for 15.3%. This represented a surprise of -3.21% as analysts had expected the region to contribute $1.05 billion to the total revenue. In comparison, the region contributed $559 million, or 8.3%, and $1.44 billion, or 21.6%, to total revenue in the previous and year-ago quarters, respectively.
Korea accounted for 14.9% of the company's total revenue during the quarter, translating to $988 million. Revenues from this region represented a surprise of -11.71%, with Wall Street analysts collectively expecting $1.12 billion. When compared to the preceding quarter and the same quarter in the previous year, Korea contributed $1.23 billion (18.4%) and $1.58 billion (23.9%) to the total revenue, respectively.
Revenue Forecasts for the International Markets
The current fiscal quarter's total revenue for Applied Materials, as projected by Wall Street analysts, is expected to reach $6.61 billion, reflecting an increase of 2.9% from the same quarter last year. The breakdown of this revenue by foreign region is as follows: China is anticipated to contribute 36.1% or $2.39 billion, Southeast Asia 2.6% or $170.09 million, Japan 8.2% or $544.89 million, Europe 7.3% or $485.56 million, Taiwan 14.2% or $941.52 million and Korea 14.9% or $986.83 million.
For the entire year, the company's total revenue is forecasted to be $26.59 billion, which is an improvement of 0.3% from the previous year. The revenue contributions from different regions are expected as follows: China will contribute 38.8% ($10.3 billion), Southeast Asia 2.6% ($703.04 million), Japan 8.4% ($2.24 billion), Europe 7% ($1.85 billion), Taiwan 12.9% ($3.44 billion) and Korea 16.5% ($4.38 billion) to the total revenue.
Closing Remarks
Relying on global markets for revenues presents both prospects and challenges for Applied Materials. Therefore, scrutinizing its international revenue trends is key to effectively forecasting the company's future outlook.
With the increasing intricacies of global interdependence and geopolitical strife, Wall Street analysts meticulously observe these patterns, especially for companies with an international footprint, to tweak their forecasts of earnings. Importantly, several additional factors, such as a company's domestic market status, also impact these earnings forecasts.
We at Zacks strongly focus on the dynamic earnings forecast of companies, given that empirical studies have demonstrated its potent impact on the immediate price movement of stocks. Invariably, there's a positive relationship -- upward earnings predictions often result in an increase in stock prices.
With an impressive externally audited track record, our proprietary stock rating tool - the Zacks Rank - harnesses the power of earnings estimate revisions and serves as an effective indicator of a stock's near-term price performance.
At present, Applied Materials holds a Zacks Rank #3 (Hold). This ranking implies that its near-term performance might mirror the overall market movement. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
A Review of Applied Materials' Recent Stock Market Performance
Over the preceding four weeks, the stock's value has appreciated by 11.8%, against an upturn of 5.8% in the Zacks S&P 500 composite. In parallel, the Zacks Computer and Technology sector, which counts Applied Materials among its entities, has appreciated by 7.4%. Over the past three months, the company's shares have seen an increase of 7.6% versus the S&P 500's 6.3% increase. The sector overall has witnessed an increase of 7.7% over the same period.
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Applied Materials, Inc. (AMAT) : Free Stock Analysis Report
