Will Semtech ($SMTC) Beat Q4 Earnings Expectations? Key Metrics and Analysis

Semtech Corporation is set to announce its earnings on November 25, 2024, and everyone’s wondering: will they beat expectations? As a company focused on semiconductors, they’re in a pretty competitive space, but with some exciting growth areas like IoT and AI. Let me break down what I’ve been looking at and what I think might happen.

What Does Semtech Do?

Semtech makes semiconductors for IoT (Internet of Things), smart sensing, and connectivity tech. Basically, their chips power things like smart homes, industrial machines, and AI applications. They’re in a sector with tons of potential, but also some big challenges.

If you're interested in tech-focused companies like Semtech, you might also enjoy this analysis of Intuitive Machines and their NASA contracts or how Lemonade is leveraging AI in the insurance industry.

What Are Analysts Expecting?

For this quarter, Wall Street is predicting:

• Earnings Per Share (EPS): $0.23
• Revenue: $232.06 million

These aren’t super aggressive targets, which might give them a decent shot at beating them if things go right.

Why Isn’t Semtech Profitable?

Here’s where things get interesting. Their P/E ratio is 0.0, which means they’re not profitable right now. That might seem like a huge red flag, but there’s more to the story:

1. Acquisition Costs: In 2022, they bought Sierra Wireless for $1.2 billion. Big purchases like that come with a lot of short-term costs.
2. Impairment Charges: Recently, they had to write down some goodwill and intangible assets, which hurt their numbers.
3. Industry Headwinds: Like a lot of companies in this space, they’ve been hit by supply chain problems and market volatility.

If you're following companies managing profitability challenges, SoFi’s growth story is a good read too.

How Has Semtech Stock Been Performing?

Their earnings have been a bit of a rollercoaster:

• Q2 FY2025: EPS $0.11 (beat estimates); Revenue $206.1M (-12.87% YoY).
• Q1 FY2025: EPS $0.06 (met estimates); Revenue $206.1M (-12.87% YoY).
• Q4 FY2024: EPS -$0.06 (missed estimates); Revenue $192.95M (+15.18% YoY).

They’ve had a couple of solid quarters but also some misses. This quarter feels like a chance for them to show they’re getting back on track.

How Do Semtech Compare to Competitors?

Semtech isn’t operating in a vacuum. Here’s how some of their peers have been doing:

• Nvidia ($NVDA): Crushing it with 94% YoY revenue growth, thanks to AI chip demand.
• Applied Materials ($AMAT): Revenue was up, but earnings missed expectations.
• Tower Semiconductor: Steady profit growth, but nothing groundbreaking.

If you’re interested in how other tech companies are positioned, take a look at Palo Alto Networks and their strong cybersecurity demand.

What Risks Should Investors Watch For?

There are definitely some risks with Semtech here:

1. Supply Chain Issues: Delays and disruptions could hold them back.
2. High Inventory Levels: Too much stock in the market might hurt pricing.
3. Geopolitical Tensions: The US-China trade situation is a constant headache for chipmakers.

Will Semtech Beat Earnings?

I think they’ve got a pretty good shot. Here’s why:

• The expectations aren’t super high, so it’s not a huge hurdle.
• Their focus on IoT and AI is starting to pay off.
• Insider buying suggests confidence—they’ve been net buyers over the last couple of years.

What Happens to the Stock If They Beat?

If they beat earnings, I’d expect the stock to pop a little, maybe 5-10%. It’s unlikely to be a massive rally because there are still some big-picture challenges in the industry. But it could be a sign they’re turning a corner, which is good for long-term investors.

Final Thoughts

Semtech is in an exciting space with IoT and AI, but they’re dealing with some short-term growing pains. This quarter feels like a chance for them to prove they’re moving in the right direction. If they beat earnings, it’s a step forward, but they’ll still need to tackle supply chain issues and market volatility to keep growing.

Are you watching $SMTC this quarter? What do you think will happen?

Original Tweet 👉