NXPI Earnings Preview: Decoding Buy Signals

Based in Eindhoven, the Netherlands, NXP Semiconductors N.V. (NXPI) offers a semiconductor portfolio, including microcontrollers, application processors, wireless connectivity solutions, as well as semiconductor-based environmental and inertial sensors.

The chip industry is forecasted to rebound and stabilize in 2024 after a dismal 2023. Against this backdrop, NXPI will report its financial fourth-quarter results after the close of the NASDAQ Global Select Market on February 5, 2024.

The company has been able to pass on higher costs to its customers. It forecasted its fourth-quarter revenue to be in the range of $3.30 billion-$3.50 billion, aligning with the analyst estimate of $3.43 billion. Its non-GAAP EPS is expected to be between $3.44 and $3.86 for the same period, aligning with the analyst-expected figure of $3.61.

In light of its upcoming earnings, let’s look at the trends of NXPI’s key financial metrics to understand why it could be wise to wait for a more opportune moment to invest in the stock.

Analyzing the Financial Performance of NXP Semiconductors N.V. from 2021 to 2023

The data reveals that the trailing-12-month net income of NXPI has witnessed a general ascending trend from April 2021 to October 2023. Following is a summary of the significant points over this period:

• Starting at $426 million in April 2021, the net income considerably rose to $1.03 billion by July of the same year.
• There is a noticeable upward trend throughout 2021, culminating at $1.87 billion in December.
• Entering 2022, NXPI's net income continued to increase, peaking at $2.79 billion in December.
• In 2023, we observe a slight dip in April, with the net income decreasing to $2.74 billion. However, it quickly rebounded and continued to grow, reaching $2.82 billion in October 2023.

Overall, the net income of NXPI has shown a strong performance over the considered time span, marking a steady increase with slight fluctuations. Due emphasis is given to the most recent data supporting consistent growth.

The summarized trend and fluctuations in the trailing-12-month revenue for NXPI are as follows:

• Starting from April 2021, the revenue stood at $9.16 billion.
• The revenue generally showed a consistent upward trend throughout 2021 and most of 2022. By July 2022, it had risen to $12.35 billion, marking a significant increase.
• It peaked in December 2022, reaching $13.21 billion.
• However, the first three quarters of 2023 displayed a slight decline compared to December 2022. As of October 2023, the revenue was reported at $13.17 billion.

Looking at the full series, the revenue increased from $9.16 billion in April 2021 to $13.17 billion in October 2023. This translates into an overall growth rate of approximately 43.8% over this time span. However, it's worth noting that while overall the trend is positive, the most recent data shows a slight downward trend.

The current ratio of NXPI from April 2021 to October 2023 shows fluctuations over time, with more weightage given to recent data:

• Starting at 1.78 on April 4, 2021, the current ratio peaked at 2.27 on July 4, 2021.
• The subsequent drop to 1.37 on October 3, 2021, marks one of the lowest points in the ratio for this period.
• It then rebounded to 2.13 by the end of December 2021.
• Throughout 2022, the current ratio remained relatively stable, hovering around 2: at 1.85 on April 3, peaking at 2.15 on July 3, reducing to 2.08 on October 2, and slightly increasing to 2.12 by the end of December.
• The first half of 2023 saw gradual decreases, with the ratio falling to 1.75 in April and then modestly rising to 1.82 in July.
• The ratio finally climbed to 1.92 on October 1, 2023.

From the first value (1.78 in April 2021) to the last value (1.92 in October 2023), the current ratio's overall growth rate is approximately 7.9%. This suggests an overall increase despite the intermittent peaks and troughs.

The asset turnover for NXPI has shown some fluctuations over the given period; however, it demonstrates a general upward trend from April 2021 to December 2022, following which it softens slightly. Here are the key points:

• In April 2021, asset turnover was at 0.45.
• It saw steady growth over the following year and a half, peaking in October 2022 at 0.59. This represents a growth of approximately 31% from its initial value in April 2021.
• Despite a slight dip in December 2022 to 0.587, the figure remained considerably higher than the start of the timeline.
• From January to October 2023, there appeared to be a negative trend, with asset turnover decreasing consistently to reach 0.556 as of October 2023. This represents a decrease of almost 5% from the peak in October 2022 but an increase of approximately 24% from the original data point in April 2021.

In summary, while NXPI's asset turnover encountered periods of decrease, the general direction was upward from April 2021 to October 2022. More recently, the trend has been downward from December 2022 into 2023, but it is crucial to note that the latest figure still represents notable growth from the initial point in this series.

Analyzing NXP Semiconductors' Price Volatility from August 2023 to February 2024

Looking at the share price of NXPI from August 2023 to February 2024, the following trends are observed:

• August 2023 - September 2023: The share price began at $211.33 on August 11, 2023, and progressively slid down, reaching $197.20 by September 22, 2023. This represents a decline of about 6.7% over 1.5 months.
• September 2023 - October 2023: Then it wobbled between $197 and $200 over the next three weeks until October 13, 2023. There was a sharp decline in the fourth week of October to $180.60 on October 27, 2023.
• November 2023 - December 2023: Starting from November 2023, NXPI's shares started to rebound. From a low point of $174.16 on November 3, 2023, the share price rose steadily to reach a peak of $231.20 at the end of December 2023. This period indicates an approximate increase of 32.75% over two months.
• January 2024 - February 2024: In January 2024, the price fluctuated around the $210 mark, except for a brief jump to $220.02 on January 26, 2024. As of February 2, 2024, the price is $214.99.

As a trend, there seems to be a certain degree of volatility in NXPI's stock prices during this period. There is an apparent decline in prices from August 2023 through October 2023, followed by a distinct upward trajectory, reaching its peak in late December 2023. With the onset of 2024, the prices again demonstrate a decelerating trend. Here is a chart of NXPI's price over the past 180 days.

Decoding NXP Semiconductors' Performance: Insights from Quality, Momentum, and Value Ratings

NXPI, a stock that falls within the Semiconductor & Wireless Chip category of 91 total stocks, achieved a consistent POWR Ratings grade of B (Buy) from August 9, 2023, through January 12, 2024. As of February 5, 2024, the stock has an overall POWR grade of C (Neutral). For a more detailed analysis:

• At the beginning of the period on August 9, 2023, NXPI ranks 15th in its category.
• By August 26, 2023, NXPI's rank-in-category improved to 12.
• The rank fluctuated modestly throughout September 2023, oscillating between 14th and 20th positions.
• By late October and into early November 2023, NXPI improved its standing again, achieving its best rank-in-category of 11 on November 18, 2023.
• NXPI's rank-in-category varied from 13th to 18th position throughout December 2023.
• As of January 12, 2024, NXPI secured a rank-in-category of 16.
• As of the latest data point on February 5, 2024, NXPI has a rank-in-category of 21.

The POWR Ratings for NXPI reveal significant insights about its performance along various dimensions. Among all, three dimensions clearly stand out due to their high ratings or clear trends: Quality, Momentum, and Value. 

Quality: The Quality of NXPI stood high consistently, reflecting the robustness of the company's fundamentals. The quality rating was 85 on August 31, 2023, which dropped slightly to 84 by September 30, 2023, and stayed at that level until November 30, 2023. After that, the quality rating increased to 85 by December 30, 2023, and remained so until January 12, 2024. 

Momentum: The Momentum rating follows an apparent rising trend, indicating that the momentum of NXPI has been increasingly positive over time. Starting from 71 on August 31, 2023, it gradually increased to 82 by October 31, 2023. Though it dipped slightly to 78 in November 2023, it rebounded to a high of 87 by December 30, 2023, before settling down to 83 by January 12, 2024. 

Value: The Value dimension for NXPI also held substantial ratings, though it oscillated slightly over the period. It stood at 70 at the end of August 2023 and maintained that level until October 31, 2023. Still, it uptick to 71 in November 2023 before dipping to 68 by December 30, 2023, and finally marked a slight increase to 69 on January 12, 2024.

How does NXP Semiconductors N.V. (NXPI) Stack Up Against its Peers?

Other stocks in the Semiconductor & Wireless Chip sector that may be worth considering are Photronics, Inc. (PLAB), ChipMOS TECHNOLOGIES INC. (IMOS), and Everspin Technologies, Inc. (MRAM) - they have an overall rating of A (Strong Buy). Click here to explore more Semiconductor & Wireless Chip stocks.

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NXPI shares were trading at $220.15 per share on Monday morning, up $5.16 (+2.40%). Year-to-date, NXPI has declined -4.15%, versus a 3.39% rise in the benchmark S&P 500 index during the same period.

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.

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