Aggressive · Stocks to Consider and Updates

Applied Materials Earnings in Line

AMAT Applied Materials, Inc. (NASDAQ: AMAT – $17.25), provider of manufacturing equipment, services and software to the semiconductor industry, posted earnings results for the fourth and final quarter of 2015 that matched analysts’ expectations. The company reported adjusted net income of $347 million or $0.29 per share, versus $338 million or $0.27 per share in the same quarter the previous year. Revenue was $2.37 billion, up 4.6% in the same quarter last year, a bit below expectations of $2.4 billion. For the full fiscal year, the company earned $1.19 per share up from 2014’s $0.87. The company generated $1.16 billion in cash from operations and used $1.33 billion to repurchase 76 million shares of common stock in fiscal 2105. AMAT, often seen as a proxy for chip makers, also said it sees a 7.5% rise in orders to $2.42 billion over the prior year, with silicon systems orders up 8.2% to $1.44 billion, while new orders in its applied global services segment ticked up 1.9% to $761 million. Display orders rose to $195 million from $130 million a year earlier. For the current quarter, Applied is forecasting sales to be down 2% – 9% to $2.42 billion to $2.58 billion and adjusted per share earnings of $0.23 to $0.27, a range higher than the consensus of $0.24. I believe price appreciation potential is above average three to five years out, with a decent dividend yield of 2.4% adding to the appeal. Given the solid underlying fundamentals and the possibility of a future acquisition, this equity is worthy of retention in an aggressive account.


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