NVIDIA Corporation (NVDA), semiconductor bellwether stock, is scheduled to report its fiscal third quarter 2009 financial results on Thursday, November 5, 2009. In the previous quarter, the company surprised the investors by reporting net income compared to the consensus earnings loss estimate.
NVIDIA Corporation previously reported revenue of $776.5 million and net loss of $105.3 million, or $0.19 per share, compared to revenue of $892.7 million and net loss of $120.9 million, or $0.21 per share, in Q2 2008. That represented sequential growth of 17% from Q1.
Analysts' estimates for the quarter ending October 2009 (Q3) range from a low of $0.08 to a high of $0.14, with a consensus of $0.1. In the last ten years, the company's Q3 revenues trended up over Q2 revenues. The trend is likely to continue. In fact, for the fiscal quarter ending October 2009, the consensus EPS forecast has increased over the past week from $0.099 to $0.100 (1.01%) and increased over the past month from $0.093 to $0.100 (7.53%). Of the 21 analysts making quarterly forecasts, 5 raised and none lowered their forecast.
Earnings upward revision over the past month is attributable to increasing margins and increasing market share, and better mix within GPU (as the company is able to move more of its business into the 55-nanometer process node). The company's gross margins are higher on 40-nanometer products because they are fresher products and the die sizes are lower, are smaller and so they tend to be more cost effective.
For the third quarter, the company expects revenue to be up 5% to 7% from the second quarter. GAAP gross margin is expected to increase coming in the range of 36% to 38%. The primary factors for this improvement are lower overall costs, 40-nanometer volumes, and form higher gross margin products like TESLA and TEGRA as they continue to ramp. The company expects GAAP operating expenses to be in the range of $280 million. This is up from the prior quarter as a result of increased tape-out and prototype activity, as well as increased litigation expenses.
For the fiscal year ending January 2010, the consensus EPS forecast has increased over the past week from $0.218 to $0.219 (0.46%) and increased over the past month from $0.208 to $0.219 (5.29%). Of the 22 analysts making yearly forecasts, 3 raised and 2 lowered their forecast.
The company's stock closed Monday at $12.07, compared to the 52 week range of $5.75 and $16.58. The stock seems to be trading at appropriate levels.
Disclosure: Author holds no position in the above mentioned stocks.
