Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Sensata Technologies (NYSE: ST) and its peers.
Demand for analog chips is generally linked to the overall level of economic growth, as analog chips serve as the building blocks of most electronic goods and equipment. Unlike digital chip designers, analog chip makers tend to produce the majority of their own chips, as analog chip production does not require expensive leading edge nodes. Less dependent on major secular growth drivers, analog product cycles are much longer, often 5-7 years.
The 14 analog semiconductors stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 1.8% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Sensata Technologies (NYSE: ST)
Originally a temperature sensor control maker and a subsidiary of Texas Instruments for 60 years, Sensata Technology Holdings (NYSE: ST) is a leading supplier of analog sensors used in industrial and transportation applications, best known for its dominant position in the tire pressure monitoring systems in cars.
Sensata Technologies reported revenues of $943.4 million, down 8.9% year on year. This print exceeded analysts’ expectations by 1.1%. Overall, it was a strong quarter for the company with a significant improvement in its inventory levels and a beat of analysts’ EPS estimates.
“Our back-to-basics approach continues to deliver. We are building resiliency in our business and we are pleased to report a strong second quarter where we exceeded our revenue and earnings commitments and significantly improved our free cash flow," said Stephan von Schuckmann, Chief Executive Officer of Sensata.
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $32.47.
Is now the time to buy Sensata Technologies? Access our full analysis of the earnings results here, it’s free.
Best Q2: Impinj (NASDAQ: PI)
Founded by Caltech professor Carver Mead and one of his students Chris Diorio, Impinj (NASDAQ: PI) is a maker of radio-frequency identification (RFID) hardware and software.
Impinj reported revenues of $97.89 million, down 4.5% year on year, outperforming analysts’ expectations by 4.3%. The business had an exceptional quarter with a significant improvement in its inventory levels and a beat of analysts’ EPS estimates.
The market seems happy with the results as the stock is up 36.1% since reporting. It currently trades at $166.71.
Is now the time to buy Impinj? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Himax (NASDAQ: HIMX)
Taiwan-based Himax Technologies (NASDAQ: HIMX) is a leading manufacturer of display driver chips and timing controllers used in TVs, laptops, and mobile phones.
Himax reported revenues of $214.8 million, down 10.4% year on year, exceeding analysts’ expectations by 1.3%. Still, it was a softer quarter as it posted EPS in line with analysts’ estimates and an increase in its inventory levels.
As expected, the stock is down 11.8% since the results and currently trades at $7.62.
Read our full analysis of Himax’s results here.
Skyworks Solutions (NASDAQ: SWKS)
Result of a merger of Alpha Industries and the wireless communications division of Conexant, Skyworks Solutions (NASDAQ: SWKS) is a designer and manufacturer of chips used in smartphones, autos, and industrial applications to amplify, filter, and process wireless signals.
Skyworks Solutions reported revenues of $965 million, up 6.6% year on year. This print surpassed analysts’ expectations by 2.6%. It was a very strong quarter as it also produced a beat of analysts’ EPS estimates and an impressive beat of analysts’ adjusted operating income estimates.
The stock is up 11.3% since reporting and currently trades at $75.30.
Read our full, actionable report on Skyworks Solutions here, it’s free.
Power Integrations (NASDAQ: POWI)
A leading supplier of parts for electronics such as home appliances, Power Integrations (NASDAQ: POWI) is a semiconductor designer and developer specializing in products used for high-voltage power conversion.
Power Integrations reported revenues of $115.9 million, up 9.1% year on year. This result beat analysts’ expectations by 0.8%. Taking a step back, it was a satisfactory quarter as it also recorded a significant improvement in its inventory levels but revenue guidance for next quarter meeting analysts’ expectations.
The stock is flat since reporting and currently trades at $47.08.
Read our full, actionable report on Power Integrations here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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