Key Takeaways
- NXP Semiconductors fell 3% today as its fourth-quarter revenue guidance landed just under Wall Street’s estimate.
- The guide’s midpoint missed by about $10 million and its earnings guide topped estimates, so the sell-off looks overdone.
- ON Semiconductor and TE Connectivity fell too, as investors grow wary of auto suppliers.
- NXP traded below its five-year average forward P/E even before today, and its board just added $5 billion to its buyback.
NXP Semiconductors (NXPI) is down 3% today after its fourth-quarter revenue guidance came in a hair under Wall Street’s estimate, overshadowing a third-quarter beat.
It has company. ON Semiconductor (ON) is off 5%, and TE Connectivity (TEL) is down 2%.
What exactly happened
NXP reported after Tuesday’s close, and the quarter itself was strong:
- Revenue of $3.79 billion, up 19% from a year ago, against the $3.76 billion analysts expected
- Adjusted EPS of $4.20, against $4.12 expected
The outlook was the problem. NXP guided fourth-quarter revenue to $3.75 billion to $3.95 billion, and the $3.85 billion midpoint sits about $10 million under analysts’ $3.86 billion. At the midpoint, its adjusted EPS guide is above the $4.34 consensus.
Investors wanted a beat-and-raise and got a beat and an in-line outlook.
Autos are the soft spot
The guide’s midpoint also means growth slows, to 15% from a year ago after 19% in the third quarter.
And Automotive, more than half of NXP’s sales, grew just 13%. TE named weaker vehicle production as a constraint on its fiscal 2027, so investors read NXP’s auto number as a warning for the group. Does ON’s own quarter show the same drag when it reports?
The Street still sees growth
Analysts still expect NXP’s revenue to top 2023’s $13.3 billion this year and keep climbing…
A $10 million shortfall in one quarter’s guide shouldn’t move those estimates much.
TIKR tracks 30 analysts on NXP Semiconductors. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on NXP Semiconductors, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See NXP Semiconductors’ Analyst Ratings
Cheaper than usual
Even before today, NXP traded at 14x forward earnings, below its five-year average of 16x and well off the 21x it hit in May…
Today’s drop takes it closer to 13x. And the new $5 billion buyback, plus $1.3 billion left under the old one, comes to about a tenth of NXP’s market value.
My take: a $10 million gap doesn’t change a business growing 19% with a 37% adjusted operating margin.
Of course, if auto demand weakens further, the fourth quarter could land at the low end of the range. The fourth-quarter report early next year and NXP’s analyst day in March are the next checkpoints.
So what is NXP Semiconductors stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
