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What's in Store for Applied Materials (AMAT) in Q3 Earnings?

·4-min read

Applied Materials, Inc. AMAT is set to report third-quarter fiscal 2022 results on Aug 18.

For the fiscal third quarter, AMAT expects net sales of $6.25 billion (+/-$400 million). The Zacks Consensus Estimate for revenues is pegged at $6.26 billion, suggesting growth of 1% from the year-ago fiscal quarter’s reading.

Applied Materials projects non-GAAP earnings of $1.59-$1.95 per share. The Zacks Consensus Estimate for earnings is pegged at $1.78, indicating a decline of 6.3% from the year-ago fiscal quarter’s reported figure.

AMAT’s bottom line surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same once, the average earnings surprise being 2%.

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 new design wins are likely to have driven its performance in the fiscal third quarter.

Growth opportunities across specialty nodes and new nodes ramp across foundry, logic, NAND and DRAM are expected to have benefited AMAT in the to-be-reported fiscal quarter. Inventory reductions across memory and demand elasticity in NAND are likely to have acted as other tailwinds.

Applied Materials is anticipated to have witnessed solid customer momentum across automotive and advanced packaging owing to rising foundry logic spending.

All these factors are expected to have driven sales in the Semiconductor Systems Group segment in the to-be-reported quarter. For third-quarter fiscal 2022, the company’s projection for sales in the segment stands at $4.48 billion. The Zacks Consensus Estimate for the same is pegged at $4.485 billion, suggesting growth of 0.7% from the prior-year quarter’s reported figure.

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

Coming to the Applied Global Services (AGS) segment, AMAT’s growing 200-millimeter business and solid momentum among long-term service agreements are likely to have driven segmental sales in the fiscal quarter under review. For third-quarter fiscal 2022, Applied Materials’ projection for AGS sales stands at $1.43 billion. The consensus mark for the same is pegged at $1.432 billion, indicating growth of 11.3% from the prior-year fiscal quarter’s reported figure.

However, Applied Materials is likely to have continued suffering sluggishness in its Display and Adjacent Markets segment in the fiscal quarter under review. For third-quarter fiscal 2022, AMAT’s projection for this segment’s sales is $310 million. The Zacks Consensus Estimate for the same is pegged at $311 million, suggesting a decline of 27.8% from the prior-year fiscal quarter’s reported figure.

Uncertainties related to the COVID-19 pandemic are likely to have induced headwinds to AMAT in the soon-to-be-reported fiscal quarter.

What Our Model Says

Our proven model does not conclusively predict 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 -1.69% and a Zacks Rank #3.

Stocks to Consider

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

Keysight Technologies KEYS has an Earnings ESP of +1.23% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Keysight Technologies is scheduled to release third-quarter fiscal 2022 results on Aug 17. The Zacks Consensus Estimate for KEYS’ earnings is pegged at $1.79 per share, suggesting an increase of 16.2% from the prior-year fiscal quarter’s reported figure.

BJ’s Wholesale Club BJ has an Earnings ESP of +11.15% and a Zacks Rank of 3 at present.

BJ’s Wholesale Club is set to report second-quarter 2022 results on Aug 18. The Zacks Consensus Estimate for BJ’s earnings is pegged at 82 cents per share, in line with the prior-year period’s reported figure.

Box BOX has an Earnings ESP of +1.20% and a Zacks Rank #3 at present.

Box is scheduled to release second-quarter 2022 results on Aug 24. The Zacks Consensus Estimate for BOX’s earnings is pegged at 28 cents per share, suggesting an increase of 33.3% from the prior-year quarter’s reported figure.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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