by winston » Sun Nov 18, 2018 8:24 am
not vested
Nvidia Earnings Miss Is an Opportunity to Buy
Previously, NVDA stock had beaten street estimates nine out of the last 10 quarters, so investors were hoping a positive report could inject some optimism into the sector.
Nvidia reported that Q3 sales climbed to $3.18 billion, a 21% increase compared with Q3 2017. This lagged street estimates of $3.24 billion.
Earnings increased 48% to $1.97 per share. Adjusted earnings came in at $1.84 per share, beating the consensus estimate of $1.71 adjusted EPS.
The guidance for the quarter also was poor. NVIDIA said it expects to bring in $2.70 billion in revenue, plus or minus 2%, in Q4. This is well below the $3.4 billion street estimate.
Plus, this would represent a year-over-year decline. In Q4 2017, NVIDIA brought in $2.91 billion in sales.
After Nvidia's earnings report Thursday evening, Louis Navellier advised his readers to stay long.
Given that NVIDIA has beaten estimates for several quarters, I was not expecting a miss. However, I do think that Thursday night's selling was overdone.
There are algorithms that trade based on certain key words, like "miss," so that likely caused some of the volatility. While it's disappointing that NVIDIA missed sales estimates, it still is a fundamentally strong company.
In the third quarter, NVIDIA brought in record revenue from its Datacenter, Professional Visualization and Automotive businesses. And then there's the fact that NVIDIA handily beat earnings expectations.
NVIDIA is also generous with its shareholders, especially for a technology company. Last quarter, NVIDIA returned $1.13 billion to shareholders between stock buybacks and dividends.
In its third-quarter report, NVIDIA announced that it's increasing its dividend by 7% to $0.16 per share. NVIDIA also recently authorized a new $7 billion share repurchase program.
For these reasons, I do expect that NVDA shares will rebound from Thursday night's pullback.
A major factor in Nvidia's run up over the last year is that its hardware became popular with people who needed the computing power to mine virtual currencies.
Chief Executive Jensen Huang noted that the decline in cryptocurrency prices has hurt demand for its processors.
"The crypto hangover lasted longer than we expected," he said on the company's earnings call. "This is surely a setback, and I wish we had seen it earlier."
Nvidia joined other semiconductor stocks, including AMD and Intel, that have slid recently after earnings reports. The Philadelphia Semiconductor Sector Index, a capitalization-weighted index composed of 30 semiconductor companies, has dropped 12.6% since its early September highs.
Source: Investor Place
It's all about "how much you made when you were right" & "how little you lost when you were wrong"