Earnings season is here, and with it comes a lot of noise.
Most of the reaction gets shaped by price action. It's entertaining to watch, but I've rarely found it says much about how a business is actually performing. A stock that has run up can post a great quarter and still fall. A stock in a downtrend can get hit on almost nothing.
My personal preference is to always analyze results thoroughly a few days after the dust settles. The price stops moving aggressively and I can work through the numbers without the market telling me what to think.
Let's dive in.
Disclaimer: This is not financial or investment advice. I'm sharing my personal investment decisions and reasoning for educational and informational purposes. Always do your own research before making any investment decisions.
I. ASML ($ASML)
ASML holds a monopoly on extreme ultraviolet (EUV) lithography, the machines chipmakers need to manufacture the world's most advanced semiconductors. No other company makes them, and no leading-edge chip gets built without one. ASML raised full-year guidance for the second consecutive quarter, and is now expanding capacity ahead of the orders needed to fill it.
Quarter at a Glance
Total Net Sales: €9.3B, +21% YoY
Above the high end of guidance, driven by higher than expected Installed Base Management (IBM) sales.
Earnings Per Share: €7.59, +29% YoY
Net income of €2.9B, or 31.3% of net sales.
Gross Margin: 54.0%, +30 bps YoY
Also above guidance, on high margin components within IBM. Up 100 bps sequentially.
Operating Margin: 37.1%, +250 bps YoY
Operating income of €3.5B.
Free Cash Flow: €1.3B
Recovers from an outflow of €2.6B in Q1.
Q3 Guide: €11.0B to €12.0B in net sales
Gross margin of 55% to 57%.
Full-Year Guidance: €43B to €45B
Raised from €36B to €40B, with gross margin lifted 300 bps to 54% to 56%.
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