Super Micro Computer (NASDAQ:SMCI), which makes servers and other hardware for data centers, is the top-trending name on Yahoo Finance this morning. SMCI stock plunged 13% in early trading after the tech giant after the company reported mixed quarterly financial results and provided mixed guidance for the current quarter.
However, Super Micro’s revenue guidance for its fiscal year, which ends next June, was very far above analysts’ average estimate.
One bank reacted to the uneven quarterly report by keeping a “neutral” rating on the shares. The bank noted that the firm’s profit margins had come in well below its expectations.
Mixed Results and Guidance
In Super Micro’s fiscal fourth quarter, which ended in June, the company generated earnings per share of $6.25, well below analysts’ mean outlook of $4.69. However, the firm’s Q4 sales, which soared 144% versus the same period a year earlier to $5.3 billion, were roughly in line with the mean outlook.
On the guidance front, the firm predicted that its Q1 revenue would be $6 billion to $7 billion, well above the mean estimate of $5.45 billion. However, Super Micro expects to generate Q1 EPS, excluding some items, of $6.69-$8.27. The midpoint of the range is $7.49, which is slightly below analysts’ mean estimate of $7.58.
On the other hand, Super Micro expects its revenue in its fiscal year that ends on June 30, 2025, to be between $26 billion and $30 billion. That’s way above analysts’ average outlook of $14.94 billion.
SMCI Stock: Margins Provoke Worries
Given the company’s high revenue guidance, Bank of America believes that demand for its products remains high. The bank noted that due to supply shortages, $800 million of the firm’s revenue will be recognized during the current quarter instead of the last quarter.
But the bank noted that the company’s Q4 gross margin came in at 11.3%, well below the bank’s estimate of 13.6%. The miss was primarily due to the firm’s expenses related to its efforts to launch new liquid cooling products and its increased sales to hyperscalers, whose purchases are less profitable for Super Micro than those of other customers. The bank does not expect the company’s margins to recover to their prior level until around June 2025. It kept a “neutral” rating on Super Micro stock.
On the date of publication, Larry Ramer held a long position in SMCI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
