Formfactor (FORM) AI Stock Analysis

• Market Cap: $1.86B
• Dividend Yield: N/A
• Average Volume (3M): 829.29K
• Price to Earnings (P/E): 27.2
• Beta (1Y): 2.05
• Revenue Growth: 15.16%
• EPS Growth: -15.16%
• Country: US
• Employees: 2,238
• Sector: Technology
• Sector Strength: 40
• Industry: Semiconductors
• EPS (TTM): 0.89
• Shares Outstanding: 77,075,640
• 10 Day Avg. Volume: 864,798
• 30 Day Avg. Volume: 829,292
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.16
• Price to Cash Flow (P/CF): 16.80
• P/FCF Ratio: 16.40
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $40.50
• Price Target Upside: 67.56% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 9

Formfactor shows strong revenue growth and strategic advancements in DRAM and strategic partnerships, but faces profitability and cash flow challenges. Technical indicators suggest a bearish trend with potential rebound opportunities. Valuation concerns due to a high P/E ratio and lack of dividends limit the stock's appeal. The mixed earnings call sentiment reflects both opportunities and risks, contributing to a moderate overall score.

Positive Factors

Market Position

FormFactor remains focused on, and is making inroads, strengthening its market leadership at strategic customers like AMD and NVIDIA.

Revenue Growth

Demand for AI compute-driven high bandwidth memory (HBM) DRAM chips has fueled growth for FormFactor.

Technology Partnership

FormFactor announced a technology partnership with semiconductor test equipment supplier Advantest.

Negative Factors

Consumer Electronics Demand

Demand tied to consumer electronics such as PCs and smartphones is turning weaker, which will reduce Foundry/Logic probe card revenue.

Intel Customer Status

The company faces challenges with its former top customer, INTC, which is tracking below norms with uncertain recovery timing.

Regulatory Impact

US BIS shipment restrictions have significantly impacted China's demand for probe cards, contributing to a year-over-year growth headwind.

Formfactor Business Overview & Revenue Model

Company Description

FormFactor, Inc. designs, manufactures, and sells probe cards, analytical probes, probe stations, metrology systems, thermal systems, and cryogenic systems to semiconductor companies and scientific institutions. It operates in two segments, Probe Cards and Systems. The company offers probe cards to test various semiconductor device types, including systems on a chip products, mobile application processors, microprocessors, microcontrollers, and graphic processors, as well as radio frequency, analog, mixed signal, image sensor, electro-optical, dynamic random access memory, NAND flash memory, and NOR flash memory devices; and analytical probes, which are used for a range of applications, including device characterization, electrical simulation model development, failure analysis, and prototype design debugging for universities, research institutions, semiconductor integrated device manufacturers, semiconductor foundries, and fabless semiconductor companies. It also provides probing systems for semiconductor design engineers to capture and analyze accurate data; surface metrology systems for the development, production, and quality control of semiconductor products; thermal subsystems, such as thermal chucks and other test systems used in probe stations and other applications; and precision cryogenic instruments, semiconductor tests, and measurement systems. In addition, the company offers on-site probe card maintenance and service training, seminars, and telephone support services. The company markets and sells its products through direct sales force, manufacturers' representatives, and distributors in the United States, Taiwan, South Korea, China, Japan, Europe, rest of Asia-Pacific, and internationally. FormFactor, Inc. was incorporated in 1993 and is headquartered in Livermore, California.

How the Company Makes Money

FormFactor generates revenue primarily through the sale of its probe card products, which are used by semiconductor manufacturers to test ICs during the fabrication process. These products are essential for ensuring the quality and functionality of semiconductors before they are packaged and shipped to customers. The company also earns revenue from its analytical probes and engineering systems, which are utilized in research and development as well as in production environments to enhance the efficiency and accuracy of semiconductor testing. FormFactor's significant partnerships with major semiconductor manufacturers and foundries contribute to its earnings by securing long-term contracts and ensuring a steady demand for its products. Additionally, the company's focus on innovation and the advancement of testing technologies helps maintain its competitive edge and drives growth in its revenue streams.

Formfactor Financial Statement Overview

Summary

Formfactor's financials show strong revenue growth but face challenges in profitability and cash flow management. The balance sheet remains robust with low leverage, providing stability despite cash flow issues.

Income Statement

Formfactor's income statement reveals stable revenue growth with a notable increase in total revenue from $663 million to $763 million over the past year, marking a revenue growth rate of approximately 15.2%. Gross profit margin stands at 40.3%, indicating strong cost management. However, the decline in net income from $82 million to $69 million results in a reduced net profit margin of 9.1%. The EBIT margin is 8.5%, reflecting moderate profitability challenges amidst rising costs. Overall, the income statement shows growth but highlights pressures on net profitability.

Balance Sheet

The balance sheet of Formfactor is strong, with a debt-to-equity ratio of 0.03, indicating low leverage and financial stability. The company maintains a high equity ratio of 82.7%, showcasing a robust capital structure. Return on equity (ROE) is 7.3%, suggesting that while profitability could improve, the company is effectively utilizing its equity base. Overall, the balance sheet displays a healthy financial position with low risk.

Cash Flow

The cash flow statement reveals challenges with a negative operating cash flow of $-16.5 million, a significant drop from previous years. Free cash flow declined from $8.6 million to $-16.5 million, indicating cash management issues. The operating cash flow to net income ratio is negative, further reflecting operational cash constraints. Despite these concerns, the company's historic ability to generate cash flow suggests potential for recovery. The cash flow statement suggests a need for improved cash management strategies.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
763.60M	663.10M	747.94M	769.67M	693.62M
	Gross Profit
307.92M	258.58M	296.01M	322.77M	287.92M
	EBIT
64.78M	82.76M	54.91M	98.04M	83.79M
	EBITDA
112.73M	134.53M	104.64M	150.79M	140.68M
	Net Income Common Stockholders
69.61M	82.39M	50.74M	83.92M	78.52M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
360.02M	328.32M	238.13M	276.06M	255.03M
	Total Assets
1.15B	1.11B	1.01B	1.02B	963.22M
	Total Debt
27.02M	48.15M	50.37M	63.27M	69.19M
	Net Debt
-163.71M	-129.67M	-55.75M	-87.73M	-118.03M
	Total Liabilities
198.45M	197.99M	199.94M	204.74M	219.13M
	Stockholders Equity
947.77M	908.80M	808.28M	815.78M	744.08M
Cash Flow		Free Cash Flow
79.10M	8.57M	66.53M	72.87M	113.39M
	Operating Cash Flow
117.53M	64.60M	131.78M	139.36M	169.26M
	Investing Cash Flow
-33.48M	29.05M	-78.69M	-124.74M	-98.92M
	Financing Cash Flow
-64.61M	-22.71M	-95.93M	-47.20M	-30.93M

Formfactor Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 24.17
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FORM, the sentiment is Negative. The current price of 24.17 is below the 20-day moving average (MA) of 30.29, below the 50-day MA of 33.92, and below the 200-day MA of 43.64, indicating a bearish trend. The MACD of -1.66 indicates Positive momentum. The RSI at 30.62 is Neutral, neither overbought nor oversold. The STOCH value of 11.06 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FORM.

Formfactor Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KLAC	77 Outperform	$76.61B	24.25	96.81%	1.09%	12.19%	20.80%
ACLS	75 Outperform	$1.36B	6.91	21.41%	―	-9.97%	-17.87%
TER	73 Outperform	$11.05B	20.69	20.29%	0.70%	5.52%	16.59%
ONTO	70 Outperform	$5.15B	25.72	11.01%	―	21.01%	65.27%
FORM	63 Neutral	$1.86B	27.24	7.50%	―	15.16%	-15.16%
Sector *	57 Neutral	$18.54B	9.84	-14.38%	2.71%	5.07%	-23.65%
COHU	46 Neutral	$622.71M	―	-7.73%	―	-36.86%	-351.11%