Silicon Motion Technology Corporation (NASDAQ:SIMO) cruised by Q2 earnings estimates. But despite growing revenue and EPS by double digits, the stock has added to its losses for the year and is now down by over 25% YTD. The stock fell after the company reported in its outlook that revenue is expected to decline in Q3. But there is reason to think SIMO is still worth going long despite the recent fall. Why will be covered in greater detail next.
Q2 2020 quarterly earnings
Q2 revenue grew by 45% YoY to $136.8M. Non-GAAP operating income and EPS jumped by 75.7% and 55.8% to $30.4M and $0.81 respectively. Note that in the second quarter of 2019, SIMO posted a $12.9M gain on the disposal of long-term investments, which affects the YoY comparisons for EPS in terms of GAAP.
(GAAP) | Q2 2020 | Q1 2020 | Q2 2019 | QoQ | YoY |
Revenue | $136.8M | $132.8M | $98.8M | 3.0% | 38.4% |
Gross margin | 50.0% | 48.1% | 46.7% | - | - |
Operating income | $30.1M | $24.1M | $12.3M | 24.9% | 144.7% |
EPS | $0.80 | $0.74 | $0.75 | 8.1% | 6.7% |
(Non-GAAP) | |||||
Revenue | $136.8M | $132.8M | $94.3M | 3.0% | 45.1% |
Gross margin | 50.0% | 48.2% | 51.5% | - | - |
Operating income | $30.4M | $26.6M | $17.3M | 14.3% | 75.7% |
EPS | $0.81 | $0.80 | $0.52 | 1.0% | 55.8% |
Source: Silicon Motion Technology Form 6-K
(GAAP) | Q3 2019 | Q3 2020 (guidance) | YoY |
Revenue | $110.5M | $112-120M | 4.98% |
Gross margin | 49.6% | 47.9-49.9% | - |
CY2019 | CY2020 | ||
Revenue | $457.3M | $508-521M | 12.51% |
Gross margin | 48.6% | 47.5-49.5% | - |
(Non-GAAP) | Q3 2019 | Q3 2020 (guidance) | |
Revenue | $113.2M | $112-120M | 2.47% |
Gross margin | 39.8% | 48.0-50.0% | - |
CY2019 | CY2020 | ||
Revenue | $449.4M | $508-521M | 14.49% |
Gross margin | 50.1% | 47.5-49.5% | - |
The outlook was somewhat of a mixed bag. The forecast calls for Q3 revenue of $112-120M, an increase of 2.47% YoY at the midpoint. Not only is growth much lower than the previous quarter, but it's also a decline of 15.2% in
