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Semiconductors Stocks

Nvidia (NVDA) Achieves New Record: Q1 Earnings Beat and Forward Split Announcement

Nvidia (NVDA) Post Market $990 New Record.

  • Another beat, 10:1 forward split new record price, and higher guidance
  • Nvidia press release (NASDAQ: NVDA): Q1 Non-GAAP EPS of $6.12 beats by $0.54.
  • Revenue of $26.04B (+262.2% Y/Y) beats by $1.45B.
  • Record quarterly Data Center revenue of $22.6 billion, up 23% from Q4 and up 427% from a year ago
  • Ten-for-one forward stock split effective June 7, 2024
  • The quarterly cash dividend raised 150% to $0.01 per share on a post-split basis.
  • Q2 Outlook: Revenue is expected to be $28.0 billion vs. consensus of $26.84B, plus or minus 2%.
  • GAAP and non-GAAP gross margins are expected to be 74.8% and 75.5%, respectively, plus or minus 50 basis points. For the full year, gross margins are expected to be in the mid-70% range.
  • GAAP and non-GAAP operating expenses are expected to be approximately $4.0 billion and $2.8 billion, respectively. Full-year operating expenses are expected to grow in the low-40% range.
  • GAAP and non-GAAP other income and expenses are expected to be an income of approximately $300 million, excluding gains and losses from non-affiliated investments.
  • GAAP and non-GAAP tax rates are expected to be 17%, plus or minus 1%, excluding any discrete items.
  • Shares +4.3%.
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Enterprise Software Stocks

Snowflake (SNOW) Q1 Earnings Review: Strong Revenue Growth Amidst Mixed EPS Results

Source: Snowflake

Snowflake (SNOW) $171 Up 7% post earnings.

  • Snowflake press release (NYSE: SNOW): Q1 Non-GAAP EPS of $0.14 misses by $0.03.
  • Revenue of $828.71M (+32.9% Y/Y) beats by $42.82M.
  • Product revenue of $789.6 million in the first quarter, representing 34% year-over-year growth
  • Net revenue retention rate of 128% – This is great.
  • 485 customers with trailing 12-month product revenue greater than $1 million
  • 709 Forbes Global 2000 customers
  • Remaining performance obligations of $5.0 billion, representing 46% year-over-year growth. – This is another good sign. Growing faster than revenue growth.
  • Q2 Outlook: Product revenue $805m – $810M; Operating income margin 3%.
  • 2025 Outlook: Product revenue $3,300M; Operating income margin 3%; Adjusted free cash flow margin 26% – Good cash flow margin.
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Stocks

 Solventum Has No Revenue Growth Prospects

Solventum (SOLV) $67

The valuation is reasonable, the price to sales ratio is just 1.5x with a $12Bn Market Cap and $8.2Bn in sales.

Solid profit-making company with 25% operating margins and an EPS of $6.25, which gives it a decent multiple of 67/6.25 or just 11 – this is a discount to comparable health companies for sure.

The big problem is the lack of revenue growth, Solventum has been struggling at $8.2MBn in sales for the last three years, and even post spin-off is guiding to zero growth. That is also a bit difficult to swallow with all their segments – MedSurg, dental, health information and drinking water filtration, having 4-6% annual growth opportunities. There seems to be an execution problem.

Pre-spin off this was a well-entrenched 70 year business within 100,000 global customers, with presence in 75% of US hospitals and 50% international sales

3M has saddled it with $7.7Bn of debt so there is an interest burden of $400Mn which will dent profitability, till they reduce it in the next two three years.

The low valuation is definitely interesting, but we don’t want to walk into a value trap, where the stock just stagnates because of zero growth. Right now, there needs to be better execution or at least a strategic plan to start growing again. 

It might make sense to buy a small quantity to take advantage of the low valuation and then add more with better growth visibility.