Applied Materials Inc. (NASDAQ:AMAT) is a stock that keeps on giving at the back of solid underlying fundamentals. Over the past year, the stock has rallied by more than 80%, benefiting from a string of good news, key among them being solid financial results.
Revenue & Earnings Growth
An impressive fourth-quarter and full-year financial report underscore a company firing on all angles. Record quarterly performance helped by strong demand for semiconductor systems and services but affirmed its long-term prospects.
The semiconductor giant reported a 25% year over year increase in revenues that totaled $4.69 billion. GAAP earnings per share also rose to record highs of $1.23 a share, with non-GAAP EPS increasing 56% to $1.25 a share. The company also generated record annual cash from operations of $3.80 billion.
For the full-year, revenues totaled $17.20 billion at the back of $4.37 billion in operating income, with full year earnings per share totaling $3.92. The company paid $787 million in dividends during the year and used $649 million in purchasing 12 million shares.
Applied Materials has emerged as Wall Street darling in the semiconductor sector, going by its 80% plus rally over the past 12 months. Renewed and strengthened investor confidence stems from accelerated growth fuelled by strong demand for the company’s semiconductor equipment and services.
Applied Materials Outlook
In addition, the company has benefited from strong demand for chips across multiple industries. The working from home spectacle has fuelled strong demand for devices, conversely, chips used to power the devices all but working to Applied Materials strength.
As it stands, the company generated more than 60% of its revenue from semiconductor systems. The applied global services business, which entails installing and maintaining systems for chipmakers, accounts for about 24% of its total revenue.
Management expects the growth momentum experienced in 2020 to continue in 2021. Likewise, revenue is expected to increase 4.5%, with earnings per share increasing 7.9%. The company is also expected to accrue substantial market share, its share of the global semiconductor equipment market having risen to 16.4% from 15.9% in 2020.