Applied Materials (AMAT) Q4 earnings preview: Key factors to watch

Applied Materials (NASDAQ: AMAT) is slated to report fourth quarter 2019 earnings results on Thursday, November 14, after the market closes. Analysts have estimated earnings of $0.76 per share on revenue of $3.68 billion. This compares to earnings of $0.97 per share on revenue of $4.01 billion reported a year earlier.

Last quarter, Applied Materials saw revenue declines in all three business divisions due to a challenging market environment. The company has been focusing on developing new products and capabilities and this might help it see a pickup in the fourth quarter results.

The company is also expected to benefit from its investments in areas like Internet of Things and artificial intelligence. Updates on the Kokusai acquisition are also worth watching. Kokusai’s wafer equipment is helpful in processing chips which are used in high-growth areas like self-driving cars, IoT, and artificial intelligence. 

Applied gets a major portion of its revenue from the Asia Pacific region and China is a significant contributor. The impact of the US-China trade tensions on the results is a factor to watch.

Also see: Nvidia Q3 2020 Earnings Preview

In the third quarter of 2019, Applied beat earnings expectations despite posting a year-over-year decline. Adjusted EPS fell 29% to $0.74 while sales dropped 14% to $3.56 billion.

For the fourth quarter, Applied Materials has guided for net sales of about $3.685 billion, plus or minus $150 million. Adjusted earnings are anticipated to be in the range of $0.72 to $0.80 per share.  

Shares of Applied have gained 71% so far this year and 21% in the past three months.

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