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Maxim (MXIM) Q1 Earnings and Revenues Surpass Estimates

Maxim Integrated Products, Inc. MXIM reported first-quarter fiscal 2021 adjusted earnings of 72 cents per share, which beat the Zacks Consensus Estimate of 58 cents. The figure increased 38.5% year over year and 24.1% on a sequential basis.

Revenues of $619.4 million outpaced the Zacks Consensus Estimate by 12.99%. Also, the top line increased 16.2% year over year and 13.6% on a sequential basis.

Revenues were driven by broad based strength across all end markets, namely Consumer and Automotive, Communications and Data Center, and Industrial.

Analog Devices announced plans to acquire Maxim for more than $17 billion in July. During the quarter, the company stated that it is working well toward the closure of the deal.

Maxim Integrated Products, Inc. Price, Consensus and EPS Surprise

Maxim Integrated Products, Inc. Price, Consensus and EPS Surprise

Maxim Integrated Products, Inc. price-consensus-eps-surprise-chart | Maxim Integrated Products, Inc. Quote

End Market in Detail

Industrial: The company generated 31% of total revenues from this market for the reported quarter. Revenues in this market advanced 18% from the prior-year quarter, primarily owing to an uptick in test equipment demand.

Automotive: This market accounted for 26% of fiscal first-quarter revenues. Revenues were up 13% on a year-over-year basis, driven by strength in infotainment, driver assistance and electric vehicle content.

Consumer: Maxim generated 22% of revenues from this market. Revenues in this market were up 2% year over year due to strength across smartphones, gaming, wearables, tablets and broad-based personal electronics in Consumer.

Communications and Data Center: Revenues from this market, which now includes computing, accounted for 21% of the total revenues. This reflects an improvement of 37% from the year-ago quarter.

Operating Details

Non-GAAP gross margin was 68.4%, which expanded 340 basis points (bps) from the year-ago quarter.

Non-GAAP operating expenses of $191.8 million increased 3.6% year over year. Further, as a percentage of revenues, the figure expanded 370 bps from the prior-year quarter.

Operating margin came in at 32.5%, up 320 bps from the year-ago quarter.

Balance Sheet & Cash Flow

As of Sep 26, 2020, cash, cash equivalents and short-term investments were $1.6 billion, down $2 million from the prior quarter.

Long-term debt was $994.4 million at fiscal first quarter-end compared with $994 million at fiscal fourth quarter-end.

During the quarter under review, cash flow from operations was $163 million, down from $212 million in the prior quarter. Further, the company utilized $13 million for capital expenditure during the fiscal first quarter.

Maxim spent $9 million in repurchasing shares and made a dividend payment of $128 million (48 cents per share).

Zacks Rank & Stocks to Consider

Maxim currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include ON Semiconductor Corporation ON, Silicon Laboratories, Inc. SLAB and Alibaba Group Holding Limited BABA, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for ON Semiconductor, Silicon Laboratories, and Alibaba is currently projected at 1.3%, 15% and 19.4%, respectively.

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