Vishay Intertechnology (NYSE:VSH) misses third-quarter revenue targets based on stock history

Stock history –

Semiconductor maker Vishay Intertechnology (NYSE:) fell short of market expectations in the third quarter of fiscal 2024, falling 13.9% year-over-year to $735.4 million. The company's full-year revenue forecast of $720 million at midyear was 75.9% below analysts' estimates. GAAP loss of $0.14 per share was also 197% below analyst consensus estimates.

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Vishay Intertechnology (VSH) Q3 CY2024 Highlights:

• Revenue: $735.4 million vs. analyst estimates of $748.8 million (1.8% miss)
• EPS: -$0.14 vs. analyst estimates of $0.15 (-$0.29 miss)
• EBITDA: $71.51 million vs. analyst estimates of $83.08 million (13.9% miss)
• Gross margin (GAAP): 20.5%, down from 27.8% in the same quarter last year
• Outstanding inventory: 107, up from 106 in the previous quarter
• Operating margin: -2.5%, compared to 13.5% in the same quarter last year
• EBITDA margin: 9.7%, down from 18.9% in the same quarter last year
• Free cash flow was -$8.83 million, a decrease from $55.5 million in the year-ago quarter
• Market capitalization: $2.33 billion

“For the third consecutive quarter, sales have remained fairly consistent this year, reflecting an extended period of destocking as the pace of consumption among industrial customers remains slow, backlogs are cleared and macroeconomic conditions in Europe deteriorate,” said Joel Smejkal , President and CEO.

Company Overview Named after the founder's ancestral village in what is now Lithuania, Vishay Intertechnology (NYSE:VSH) makes simple chips and electronic components that are building blocks for virtually all types of electronic devices.

Analog semiconductors

Demand for analog chips generally depends on overall economic growth, as analog chips serve as building blocks for most electronic goods and devices. Unlike digital chip designers, analog chip manufacturers tend to produce the majority of their chips themselves because analog chip manufacturing does not require expensive leading-edge nodes. Analog product cycles are less dependent on large secular growth drivers and are much longer, often 5-7 years.

Sales growth

Reviewing a company's long-term performance can provide insights into its business quality. Any company can be successful in the short term, but a top-notch company maintains growth for years to come. Unfortunately, Vishay Intertechnology's revenue only grew at a compound annual growth rate of 1.2% over the last five years. This shows that there was no significant expansion, which is a rough starting point for our analysis. Semiconductors are a cyclical industry and long-term investors should be prepared for periods of high growth followed by periods of decline.

At StockStory, we value long-term growth, but in semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Vishay Intertechnology's history shows that the company has grown in the past, but has lost profits over the past two years as revenue fell 7.1% annually.

This quarter, Vishay Intertechnology missed Wall Street estimates and reported a rather uninspiring 13.9% year-over-year decline in revenue, bringing in $735.4 million in revenue.

Looking ahead, sell-side analysts expect revenue to rise 6.8% over the next 12 months, an improvement over the last two years. Although this forecast shows that the market believes its newer products and services will result in better performance, it is still below the industry average.

Product demand and outstanding inventory

Days Inventory Outstanding (DIO) is an important metric for chipmakers because it reflects a company's capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. A steadily rising DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may need to reduce production.

This quarter, Vishay Intertechnology's DIO was 107, which is 16 days above the five-year average, indicating that the company's inventories have risen to higher levels than in the past.

Key takeaways from Vishay Intertechnology's Q3 results

We found it difficult to find many strong positives in these results. Full-year sales forecast fell short of analyst expectations and sales fell short of Wall Street estimates. Overall, this quarter could have been better. Immediately following the results, shares were flat at $17.10.