3 Tech Stocks Breaking Out on Strong Q2 Results
Wall Street continues to defy the odds with its record-breaking expansion. In spite of the ongoing trade spat between the U.S. and China, spectacular earnings beats in the tech sector have been helping fuel the bull run.
The Nasdaq, which is up approximately 28% year-to-date, is at record levels, as is the Technology Select Sector SPDR Fund (NYSEARCA:XLK), having advanced 36% since the start of the year.
While the big tech names have been hogging all the limelight, there are a number of smaller tech stocks reporting better-than-expected earnings, helping propel them significantly higher.
Earnings season has only just begun, but the following three tech stocks soaring on their earnings beats are worth watching.
Chegg Inc (NYSE:CHGG) is a digital education tech stock that we have been following closely over the course of 2019. The Santa Clara, California-based company is involved in online textbook rentals, tutoring, test preparation, and more.
On July 30, Chegg stock hit a new all-time high of $48.22, a year-to-date gain of 72.2%. CHGG stock soared approximately 15% that day after the company reported strong second-quarter results and raised its full-year guidance.
Chart courtesy of StockCharts.com
After the markets closed on July 29, Chegg Inc announced that revenue for the second quarter, ended June 30, increased 26% year-over-year to $93.9 million, topping analyst expectations of $92.39 million. (Source: “Chegg Reports Q2 2019 Financial Results and Raises Full Year 2019 Guidance,” Chegg Inc, July 29, 2019.)
Services revenue was up 30% at $80.3 million, representing 86% of total revenue, compared to 83% of total revenue in the same period last year.
The number of Chegg services subscribers increased 30% year-over-year to a record 2.2 million. The total number of “Chegg Study” content views was up 25% year-over-year at 198 million.
The company reported a second-quarter net loss of $2.0 million, or $0.02 per share, a sharp improvement from the loss of $3.9 million, or $0.03 per share, in the same prior-year period.
Chegg reported adjusted net income of $29.8 million, or $0.23 per share, versus $0.12 per share in the second quarter of 2018. Wall Street was expecting Chegg to report adjusted net income of $0.10 per share.
The company reported second-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $31.1 million, a 61% increase from the $19.3 million recorded in the second quarter of 2018.
Looking ahead, Chegg Inc raised its full-year guidance for net revenue to be in the range of $398.0 to $402.0 million. At the midpoint, that would be year-over-year revenue growth of 24.5%.
The company expects its 2019 adjusted EBITDA to be in the range of $121.0 to $124.0 million. At the midpoint, that’s a 47% increase from the $83.3 million recorded in fiscal 2018.
RingCentral Inc (NYSE:RNG) is a leading provider of cloud-based software-as-a-service communications, collaboration, and contact center solutions. The company’s “RingCentral Office” provides call auto-attendant, a mobile app for “iPhone” and “Android,” video conferencing, and screen sharing.
RNG stock was advancing in the days leading up to its second-quarter results, with investors clearly expecting the company to report solid numbers. The Belmont, California-based company didn’t disappoint, reporting better-than-expected results for the period and raising its full-year guidance.
On July 30, RingCentral stock popped more than 16%, hitting a record intraday high of $146.38. This put the company’s share price up 83% year-to-date.
Chart courtesy of StockCharts.com
On July 29, RingCentral announced that its first-quarter revenue increased 34% year-over-year to $215.0 million, topping Wall Street projections by approximately $10.5 million, or five percent. The company reported a net loss of $0.11 per share, compared to $0.10 in the same period last year. (Source: “RingCentral Announces Second Quarter 2019 Results,” RingCentral Inc, July 29, 2019.)
Adjusted earnings for the second quarter were $0.21, versus $0.19 per share in the same prior-year period. Analysts were expecting RingCentral to report adjusted earnings of $0.16 per diluted share.
The company ended the quarter with cash and cash equivalents of $568.0 million, up from $549.0 million at the end of the first quarter.
RingCentral raised its guidance for 2019 to a revenue range of $874.0 to $877.0 million, from a previous guidance range of $862.0 to $866.0 million, representing annual growth of 30%.
The company also raised its adjusted earnings-per-share estimate to a range of $0.77 to $0.79, up from a previous range of $0.71 to $0.75.
Amkor Technology, Inc.
Amkor Technology, Inc. (NASDAQ:AMKR) is one of the world’s biggest providers of semiconductor packaging and test services. Located in Tempe, Arizona, the company has strategic manufacturing agreements with more than 250 of the world’s leading semiconductor companies, electronics original equipment manufacturers, and foundries.
Amkor stock has been on a roller coaster ride in 2019. The company had great momentum over the first four months of the year, but the stock was victim to the broad-based May selloff.
AMKR stock started to trend higher in June, along with the rest of the market. But the stock really soared on July 30 after the company posted a second-quarter earnings beat.
The company’s share price soared approximately 18% on July 30, breaking through a tested resistance level at $9.50. It hit an intraday high of $9.64, which is just slightly lower than the 52-week high of $9.74 it reached on April 25.
Amkor stock is currently trading up approximately 49.5% year-to-date.
Chart courtesy of StockCharts.com
Amkor announced its second-quarter results after market close on July 29. Second-quarter revenue came in at $895.0 million, slightly less than the projected $896.0 million. (Source: “Amkor Technology Reports Financial Results for the Second Quarter 2019,” Amkor Technology, Inc., July 29, 2019.)
Operating income for the second quarter was $23.0 million, compared to $54.0 million in the same prior-year period and $13.0 million sequentially.
The company reported a second-quarter loss of $9.5 million, or $0.04 per share, compared to net income of $33.3 million, or $0.14 per share, in the same prior-year period. Wall Street was projecting a second-quarter loss of $0.12 per share. In the first quarter of 2019, Amkor reported a net loss of $23.0 million, or $0.10 per share.
Second-quarter EBITDA was $149.0 million, compared to $208.0 million in the same period last year and $153.0 million in the first quarter.
Amkor ended the second quarter with cash and cash equivalents of $551.0 million and total debt of $1.3 billion.
In the third quarter, Amkor expects its revenue to increase about 15% sequentially to a range of $990.0 million to $1.1 billion. It also expects to report third-quarter net income in the range of a loss of $7.0 million, or $0.03 per share, to a profit of $41.0 million, or $0.17 per share.
Tech stocks are continuing to have a great year, with tech companies of every size blowing away Wall Street expectations.
And there is every expectation that tech stocks will continue to do well in the second half of 2019. With the exception of RingCentral, this shows that you don’t need to follow high-priced tech stocks to enjoy serious gains.