What Happened?
Shares of chip manufacturer NXP Semiconductors (NASDAQ: NXPI) fell 9.4% in the morning session after the company reported weak third-quarter earnings. Its revenue guidance for next quarter missed analysts' expectations, and its EBITDA fell short of Wall Street's estimates. The top line weakness was partly attributed to softness in the Industrial & IoT market.
Also, CEO, Kurt Sievers, mentioned that the guidance for the fourth quarter reflects broader macro weakness, particularly in Europe and the Americas. Overall, this was a softer quarter and we've noticed that a number of other semis companies have struggled this quarter due to the macro.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy NXP Semiconductors? Access our full analysis report here, it’s free.
What The Market Is Telling Us
NXP Semiconductors’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 10.1% on the news that the company reported weak second-quarter earnings results. Its revenue guidance for next quarter missed analysts' expectations, and its inventory levels slightly increased. In addition, revenue declined 5% during the quarter.
On a more positive note, the company is expected to return to sequential revenue growth in the near term as it exits a cyclical trough. Overall, this quarter could have been better.
NXP Semiconductors is up 0.6% since the beginning of the year, but at $222.50 per share, it is still trading 23.5% below its 52-week high of $290.78 from July 2024. Investors who bought $1,000 worth of NXP Semiconductors’s shares 5 years ago would now be looking at an investment worth $1,875.
When a company has more cash than it knows what to do with, buying back its own shares can make a lot of sense–as long as the price is right. Luckily, we’ve found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Special Free Report on a fallen angel growth story that is already recovering from a setback.
