Why Lam Research (LRCX) Stock Is Gaining Today

NEW YORK (TheStreet) -- Lam Research Corp (LRCX) shares are up 10.5% to $57.72 in early market trading on Thursday following yesterday's release of the company's third quarter earnings report.

The wafer fabrication equipment and services provider posted a third quarter EPS of $1.26, beating analysts consensus EPS estimates by 9 cents.

Net income increased 14.7% to $216.4 million over the previous quarter, while revenue for the quarter was $1.23 billion, a 9.8% year over year quarterly increase.

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TheStreet Ratings team rates LAM RESEARCH CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate LAM RESEARCH CORP (LRCX) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, attractive valuation levels and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 1.5%. Since the same quarter one year prior, revenues rose by 29.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although LRCX's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average. To add to this, LRCX has a quick ratio of 2.25, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Powered by its strong earnings growth of 2075.00% and other important driving factors, this stock has surged by 25.62% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 2225.1% when compared to the same quarter one year prior, rising from $6.41 million to $148.99 million.
  • You can view the full analysis from the report here: LRCX Ratings Report
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