Contract chipmaker GlobalFoundries on Tuesday beat Wall Street's targets for the first quarter and offered in-line to better-than-expected guidance for the current period. GFS stock jumped on the news.
The Malta, N.Y.-based company earned an adjusted 31 cents a share on sales of $1.55 billion in the March quarter. Analysts polled by FactSet had expected earnings of 23 cents a share on sales of $1.52 billion. However, on a year-over-year basis, GlobalFoundries earnings declined 40% while sales fell 16%.
For the current quarter, GlobalFoundries expects to earn an adjusted 29 cents a share on sales of $1.615 billion. That's based on the midpoint of its guidance. Wall Street was modeling earnings of 29 cents a share on sales of $1.58 billion in the second quarter. In the year-earlier period, GlobalFoundries earned an adjusted 53 cents a share on sales of $1.845 billion.
GlobalFoundries is navigating a cyclical downturn in business from fabless chipmakers exposed to the automotive and industrial markets.
GFS Stock Rises After Report
"As pockets of the semiconductor industry begin to emerge from the inventory correction, our teams are driving foundry innovation and differentiation for our customers across their essential end-markets," Chief Executive Thomas Caulfield said in a news release.
On the stock market today, GFS stock climbed 7.1% to close at 53.26.
Another semiconductor stock moving on earnings news Tuesday was Microchip Technology. Microchip stock fell 1.8% to close at 92.06. Late Monday, Microchip delivered in-line results for its fiscal fourth quarter ended March 31, but guided well below views for the current quarter.
Like GlobalFoundries, Microchip is dealing with cyclical weakness in demand for chips in automotive, industrial, communications and consumer device markets.
GlobalFoundries ranks No. 19 out of 33 stocks in IBD's semiconductor manufacturing industry group, according to IBD Stock Checkup. GFS stock has a poor IBD Composite Rating of 20 out of 99.
Meanwhile, Microchip ranks fourth in the chipmaker industry group. MCHP stock has an IBD Composite Rating of 82.
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