Silicon Motion (SIMO 44.49, -3.21 -6.73%) trades modestly lower for a second straight session as the company announced preliminary Q2 revenue and earnings to the dismay of investors.
The reason we say dismay here is mainly because for the past two quarters, SIMO has either narrowly beat market expectations or reported in-line earnings and revenues. Exactly, SIMO reported in-line Q1 earnings on April 27 (while at the same time giving in-line Q2 and FY17 guidance), and reported a narrow earnings beat in Q4 (January 23). As one can tell, the guidance doesn’t really leave much leeway room as it is, so announcing tempered expectations relative to prior guidance is the likely culprit to the stock’s downside today.
As it relates to today’s prelim numbers, the commentary does not exactly instill confidence into bulls right now. That being said, SIMO now sees Q2 revenues slightly below the $134-140 million guidance range with non-GAAP gross margins to be at the low-end of the prior guidance range between 48.5-50.5%.
In a more general sense, the semiconductor space has been on a roll lately. SIMO peers AVGO +1.31%, TXN +0.95%, MU +0.96%, ASML +0.75%, ADI +0.62% all boast impressive gains YTD in their own right. Semi bellwether Intel (INTC 33.82, +0.19 +0.56%) reported strong Q1 results in late-April and gave some favorable commentary for the full year while also raising its guidance for that period. Peer NVIDIA (NVDA 146.93, +3.45 +2.40%), while paring YTD gains modestly in the past few weeks, still claims notable year-to-date gains with an equally impressive Q1 beat in the rear-view mirror from early May. While SIMO is the proverbial baby of the group (at least by market capitalization standards), the stock has pretty much towed the line with the semi space, mirroring the YTD advance up until this point.
Looking ahead, SIMO will give full Q2 financial results after the market closes on July 31, 2017 and will host a conference call on August 1, at 8 am ET.