Company Performance - Amkor Technology's stock closed at $25.58, reflecting a -1.69% change from the previous trading day, which was less than the S&P 500's daily loss of 1.54% [1] - Over the last month, Amkor's shares decreased by 1.36%, underperforming the Computer and Technology sector's gain of 0.11% and exceeding the S&P 500's loss of 2.2% [2] - The upcoming earnings disclosure is anticipated to show an EPS of $0.37, representing a 22.92% decline compared to the same quarter last year, with a consensus revenue estimate of $1.65 billion, down 5.78% from the previous year [3] Analyst Estimates - Recent changes to analyst estimates for Amkor Technology are important as they reflect short-term business trends, with positive revisions indicating analyst optimism about the company's profitability [4] - The Zacks Rank system, which evaluates these estimate changes, currently ranks Amkor Technology at 3 (Hold), indicating a neutral outlook [6] Valuation Metrics - Amkor Technology is trading at a Forward P/E ratio of 14.74, which is a discount compared to its industry's Forward P/E of 26.8 [7] - The Electronics - Semiconductors industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 137, placing it in the bottom 46% of over 250 industries [7][8]

Group 1 - Amkor Technology's stock closed at $25.13, reflecting a -1.64% change from the previous day, underperforming the S&P 500's loss of 0.09% [1] - Over the past month, Amkor's shares gained 0.75%, which is lower than the Computer and Technology sector's gain of 3.04% and better than the S&P 500's loss of 0.29% [1] Group 2 - The upcoming earnings per share (EPS) for Amkor is projected at $0.37, indicating a 22.92% decline compared to the same quarter last year, with revenue expected to be $1.65 billion, down 5.78% year-over-year [2] - For the full year, analysts expect earnings of $1.38 per share and revenue of $6.38 billion, representing changes of -5.48% and -1.85% from the previous year, respectively [3] Group 3 - Recent revisions to analyst forecasts for Amkor Technology are important as they reflect changing business trends, with positive revisions indicating a favorable business outlook [4] - The Zacks Rank system, which assesses estimate changes, currently ranks Amkor Technology as 5 (Strong Sell), with a stagnant EPS projection over the past 30 days [6] Group 4 - Amkor Technology has a Forward P/E ratio of 18.51, which is a discount compared to the industry average Forward P/E of 36.98 [7] - The Electronics - Semiconductors industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 127, placing it in the top 50% of over 250 industries [7][8]

Core Viewpoint - Amkor Technology (AMKR) has experienced a significant decline in its stock price, down 23.7% year to date, underperforming compared to the Zacks Electronics - Semiconductors industry, Zacks Computer and Technology sector, and the S&P 500 index [1] Group 1: Financial Performance - Amkor's revenue growth is under pressure due to weakness in traditional servers, networking, and automotive end markets, with its mainstream product segment seeing a year-over-year decline for nine consecutive quarters [2] - In Q3 2024, Amkor reported a 17% year-over-year decline in sales across its industrial and automotive end markets [5] - The company expects Q4 2024 revenues to be in the range of $1.6-$1.7 billion, with a Zacks Consensus Estimate of $1.65 billion, indicating a year-over-year decline of 5.8% [9][10] Group 2: Market Opportunities - The rise in IoT wearables, such as hearables, watches, health trackers, and AR/VR devices, has created opportunities for Amkor, which provides advanced packaging solutions for these small form factor systems [4] Group 3: Competitive Landscape - The advanced packaging solution market is moderately fragmented, with competitors including Advanced Semiconductor Engineering, Taiwan Semiconductor Manufacturing Company, Intel, and JCET Group, posing a threat to Amkor's business growth [7] - Competitive pressures from these companies are concerning for Amkor's top line, as they offer advanced packaging technologies that could attract customers away from Amkor [8][9]

Core Viewpoint - The average brokerage recommendation (ABR) for Amkor Technology (AMKR) is 1.78, indicating a general suggestion to buy the stock, but reliance solely on this metric may not be advisable due to potential biases in brokerage recommendations [2][3][9]. Brokerage Recommendations - Amkor Technology has an ABR of 1.78, which is between Strong Buy and Buy, based on recommendations from nine brokerage firms [2]. - Out of the nine recommendations, five are Strong Buy and one is Buy, accounting for 55.6% and 11.1% of all recommendations respectively [2]. Limitations of Brokerage Recommendations - Studies indicate that brokerage recommendations often do not effectively guide investors towards stocks with the highest potential for price appreciation [3]. - Brokerage firms may exhibit a positive bias in their ratings due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell recommendations [4][9]. Zacks Rank Comparison - The Zacks Rank, a proprietary stock rating tool, categorizes stocks from Strong Buy to Strong Sell and is based on earnings estimate revisions, making it a more reliable indicator of near-term stock performance compared to ABR [6][10]. - The Zacks Rank is updated more frequently and reflects changes in earnings estimates promptly, unlike the ABR which may not be current [11]. Current Earnings Estimates for Amkor Technology - The Zacks Consensus Estimate for Amkor Technology has declined by 8% over the past month to $1.42, indicating growing pessimism among analysts regarding the company's earnings prospects [12]. - This decline in earnings estimates has resulted in a Zacks Rank of 5 (Strong Sell) for Amkor Technology, suggesting caution despite the Buy-equivalent ABR [13].

Core Viewpoint - Amkor Technology (AMKR) is currently rated as a Zacks Rank 5 (Strong Sell) due to a recent earnings miss and soft guidance, indicating potential challenges in the semiconductor packaging and testing services sector [1]. Company Overview - Amkor Technology, Inc. provides outsourced semiconductor packaging and test services, including design, package characterization, test, and wafer bumping services. The company was founded in 1968 and is headquartered in Tempe, AZ [2]. Earnings History - Over the past year, Amkor Technology has had three earnings beats and one miss against the Zacks Consensus Estimate. The most recent quarter reported earnings of $0.49, missing the consensus estimate of $0.50. This performance alone does not justify a Zacks Rank 1 (Strong Buy) or a Zacks Rank 5 (Strong Sell) [4]. - The company has guided earnings per share (EPS) for the next quarter to a range of $0.28 - $0.44, while the consensus was expecting EPS of $0.55 [4]. Earnings Estimates - Recent trends show a decline in earnings estimates for Amkor Technology. The current fiscal year consensus estimate has decreased from $1.54 to $1.42 over the last 60 days. For the next fiscal year, estimates have dropped from $2.29 to $1.97 during the same period [6]. - The negative movement in earnings estimates is a significant factor contributing to the stock's Zacks Rank of 5 (Strong Sell) [6]. Market Context - It is noteworthy that many stocks within the Zacks universe are experiencing negative earnings estimate revisions, leading to a broader trend of stocks falling to a Zacks Rank 5 (Strong Sell) [7].

Core Viewpoint - Three stocks have been added to the Zacks Rank 5 (Strong Sell) List due to downward revisions in their earnings estimates Group 1: Company Summaries - A. O. Smith Corporation (AOS) is a water heating and treatment company, with a current year earnings estimate revised downward by 7.1% over the last 60 days [1] - AerSale Corporation (ASLE) is an aerospace aftermarket services provider, with a current year earnings estimate revised downward by 15.4% over the last 60 days [1] - Amkor Technology, Inc. (AMKR) is a semiconductor outsourcing company, with a current year earnings estimate revised downward by 5.2% over the last 60 days [2]

Financial Performance - Net sales increased by $39.8 million, or 2.2%, to $1,861.6 million for the three months ended September 30, 2024, driven by growth in consumer and computing end markets, which rose by 30% and 23%, respectively [97][104]. - Gross margin decreased to 14.6% for the three months ended September 30, 2024, down from 15.5% in the same period of 2023, primarily due to higher material content and overhead costs [98][107]. - Operating income margin decreased by 110 basis points to 8.0% for the three months ended September 30, 2024, attributed to decreased gross margin and increased employee compensation costs [99]. - The automotive and industrial end market saw a 17% decline in net sales for the nine months ended September 30, 2024, primarily due to elevated customer inventories and weaker demand [105]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $551.3 million for the nine months ended September 30, 2024, down from $696.2 million in the same period of 2023, mainly due to changes in working capital [101]. - Capital expenditures totaled $458.1 million for the nine months ended September 30, 2024, a decrease from $511.7 million in the same period of 2023, focusing on advanced packaging and test equipment [100]. - Free cash flow for the nine months ended September 30, 2024, was $105,832, down from $190,701 in the prior year [145]. - Capital expenditures for the nine months ended September 30, 2024, amounted to $458.1 million, with expectations of approximately $750 million for the full year 2024 [138][139]. Debt and Interest - Total debt as of September 30, 2024, was $1,101.6 million, with $207.6 million due within 12 months [128]. - Interest expense increased by 20.2% to $15,622 thousand for the three months ended September 30, 2024, compared to $13,001 thousand for the same period in 2023 [113]. - Interest income rose by 30.7% to $(15,862) thousand for the three months ended September 30, 2024, compared to $(12,137) thousand for the same period in 2023 [114]. - Fixed rate debt totaled $29,834, with an average interest rate of 1.4% [156]. - Variable rate debt amounted to $2,000, with an average interest rate of 5.8% [156]. - Total debt maturities were $31,834 for the nine months ended September 30, 2024 [156]. Foreign Exchange and Investments - Approximately 90% of net sales for the nine months ended September 30, 2024, were denominated in U.S. dollars, with the remaining primarily in Japanese yen [150]. - A 10% appreciation of foreign currencies against the U.S. dollar would have resulted in an estimated $18 million decrease in income before taxes for the nine months ended September 30, 2024 [149]. - The company experienced a loss of $6.0 million due to foreign exchange rate translation for the nine months ended September 30, 2024 [153]. - The company has implemented foreign currency forward contracts to hedge certain net investment positions in foreign subsidiaries starting April 2024 [153]. Research and Development - Research and development expenses decreased by 11.6% to $120.1 million for the nine months ended September 30, 2024, compared to $135.9 million in 2023, due to a shift in asset utilization and projects moving into production [111]. Other Financial Metrics - Income tax expense decreased by 33.7% to $19,185 thousand for the three months ended September 30, 2024, compared to $28,923 thousand for the same period in 2023 [116]. - Cash and cash equivalents, along with short-term investments, totaled $1,471.5 million as of September 30, 2024, with $1,305.5 million held offshore [122]. - The company paid total quarterly cash dividends of $58.2 million during the nine months ended September 30, 2024 [137]. - The maximum borrowing capacity under the 2022 Singapore Revolver was $600.0 million as of September 30, 2024 [127]. - Off-balance sheet purchase obligations for capital expenditures were $368.3 million as of September 30, 2024, with $323.9 million payable within 12 months [135]. Operational Developments - The company began delivering advanced packages from its Vietnam Facility in Q3 2024 and is planning to build an advanced packaging and test facility in Arizona [90]. - The semiconductor industry is currently experiencing a cyclical correction, with historical trends indicating a strong correlation between GDP levels and semiconductor cycles [93]. Internal Controls - There were no changes in internal control over financial reporting that materially affected the company's controls during the quarter ended September 30, 2024 [159].

Core Viewpoint - Amkor Technology (AMKR) reported lower-than-expected earnings for Q3 2024, with a decline in net income and a dismal outlook for Q4 2024, which may negatively impact its stock price [1][5]. Financial Performance - Q3 earnings per share were 49 cents, a 9.3% decline year over year, missing the Zacks Consensus Estimate by one cent [1]. - Revenues for the quarter reached $1.86 billion, exceeding the consensus estimate of $1.83 billion, and reflecting a 2.2% year-over-year increase driven by demand for Advanced SiP technology [2]. - Operating income margin for Q3 was 8%, up 240 basis points sequentially but down 110 basis points from the previous year [8]. - EBITDA for Q3 was $309 million, a 25% increase sequentially but a 7% decline year over year [8]. Market Segmentation - Advanced products accounted for 84.2% of total Q3 revenues, while mainstream products made up 15.8% [6]. - The Communications sector contributed 52% of Q3 revenues, while Automotive and Industrial markets accounted for 16% [7]. - Consumer and Computing markets each generated 16% of revenues [8]. Guidance and Outlook - For Q4 2024, Amkor anticipates revenues between $1.60 billion and $1.70 billion, lower than the Zacks Consensus Estimate of $1.85 billion [10]. - Gross margin for Q4 is expected to be between 13.5% and 15.5%, with net income projected between $70 million and $110 million [11]. Balance Sheet and Cash Flow - As of September 30, 2024, total cash and short-term investments were $1.47 billion, down from $1.55 billion at the end of Q2 [9]. - Long-term debt decreased to $894 million from $949.3 million at the end of Q2 [9]. - Operating cash flow for Q3 was $164.2 million, totaling $551.3 million for the first three quarters of 2024 [9].

Core Insights - Amkor Technology (NASDAQ: AMKR) has shown overall positive performance, particularly in its tech solutions segment, despite mixed financial results in recent quarters [1] Financial Performance - For Q3, Amkor's earnings reflect a mixed performance, indicating variability in financial outcomes [1]

Group 1 - Amkor Technology (NASDAQ: AMKR) provides outsourced semiconductor packaging and testing services, capitalizing on industry megatrends such as 5G, automotive, high-performance computing, and IoT [1] - The company is recognized for its leadership in advanced packaging markets, which is a significant growth area [1] - A recent partnership with TSMC is expected to enhance Amkor's capabilities and market position [1] Group 2 - The investment strategy focuses on identifying companies in niche markets with strong growth potential, solid management, sound capital allocation, and reasonable valuation [1] - The portfolio typically consists of 15-20 stocks, emphasizing diversification, risk management, and disciplined trading [1] - The target annual return for the portfolio is set at 15% [1]