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Formfactor (FORM)
NASDAQ:FORM
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Formfactor
(NASDAQ:FORM)63Neutral
Positive Factors
Market Leadership
FormFactor remains focused on, and is making inroads, strengthening its market leadership at strategic customers like AMD and NVIDIA.
Revenue Growth Potential
There is potential for revenue growth from AMD qualifications and NVDA networking base, although the timing is uncertain.
Negative Factors
Customer Dependence
The company faces challenges with its former top customer, INTC, which is tracking below norms with uncertain recovery timing.
Demand Weakness
FormFactor cited unusually weak PCs and smartphones as probe card demand culprits, leading to a retreat in gross margin.
Revenue Decline
FormFactor reported a slight miss for 4Q24 but guided 1Q25 sequentially lower and well below consensus estimates.
Formfactor (FORM) vs. S&P 500 (SPY)
Market Cap
$2.45B
Dividend YieldN/A
Average Volume (3M)941.04K
Price to Earnings (P/E)36.5
Beta (1Y)2.15
Revenue Growth15.16%
EPS Growth-15.16%
CountryUS
Employees2,115
SectorTechnology
Sector Strength48
IndustrySemiconductors and Equipment
Share Statistics
EPS (TTM)0.89
Shares Outstanding77,565,830
10 Day Avg. Volume774,826
30 Day Avg. Volume941,045
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.21
Price to Cash Flow (P/CF)17.00
P/FCF Ratio16.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$41.67Price Target Upside28.69% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
Formfactor Business Overview & Revenue Model
Company DescriptionFormFactor, Inc. engages in the provision of test and measurement solutions. It operates through the following segments: Probe Cards and Systems. The Probe Cards segment consists of technologies and product architectures, including micro-electromechanical systems technologies. The Systems segment comprises of analytical probe solutions for on-wafer probing, board test, and package test. FormFactor was founded by Igor Khandros on April 15, 1993 and is headquartered in Livermore, CA.
How the Company Makes MoneyFormFactor 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.78
Positive
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.82
Very Positive
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.65
Positive
| 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
Negative
32.38
Price Trends
40.05
Negative
41.20
Negative
46.49
Negative
Market Momentum
-2.19
Positive
32.98
Neutral
9.99
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 32.38 is below the 20-day moving average (MA) of 35.47, below the 50-day MA of 40.05, and below the 200-day MA of 46.49, indicating a bearish trend. The MACD of -2.19 indicates Positive momentum. The RSI at 32.98 is Neutral, neither overbought nor oversold. The STOCH value of 9.99 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FORM.
Formfactor Risk Analysis
Formfactor disclosed 34 risk factors in its most recent earnings report. Formfactor reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Formfactor Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $1.81B | 9.53 | 21.41% | ― | -9.97% | -17.87% | |
70 Outperform | $17.34B | 32.29 | 20.29% | 0.45% | 5.52% | 16.59% | |
70 Outperform | $6.67B | 34.52 | 11.01% | ― | 21.01% | 65.27% | |
69 Neutral | $92.89B | 29.40 | 96.81% | 0.90% | 12.19% | 20.80% | |
63 Neutral | $2.45B | 36.50 | 7.50% | ― | 15.16% | -15.16% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
46 Neutral | $840.78M | ― | -8.15% | ― | -36.86% | -351.11% |
* Technology Sector Average
Performance Comparison
FORM
Formfactor
32.38
-13.78
-29.85%
ACLS
Axcelis Technologies
58.54
-60.09
-50.65%
COHU
Cohu
18.39
-14.40
-43.92%
KLAC
KLA
715.81
-1.05
-0.15%
ONTO
Onto Innovation
140.17
-56.44
-28.71%
TER
Teradyne
110.21
0.66
0.60%
Formfactor Earnings Call Summary
Earnings Call Date: Feb 5, 2025 | % Change Since: -21.25% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
FormFactor demonstrated strong growth in DRAM probe-card revenue and strategic advancements through partnerships and acquisitions. However, this was balanced by significant challenges, including a sequential decline in revenue and margins, export control impacts in China, and weakness in Foundry and Logic demand. The mixed results indicate both positive and negative trends in the business environment.Highlights
Record DRAM Probe-Card Revenue
FormFactor reported record DRAM probe-card revenue for the third consecutive quarter, driven by solid DDR5 demand and sequential growth in High Bandwidth Memory (HBM) which increased to approximately half the record quarterly DRAM revenue.
Significant Strategic Developments
FormFactor announced the acquisition of a 20% stake in FICT Limited, a leading supplier of complex multi-layer organic substrates, and a technology partnership with Advantest Corporation to enhance advanced packaging and wafer-level test capabilities.
Fiscal Year 2024 Revenue Growth
FormFactor recorded fiscal year 2024 revenues of $764 million, an increase of 15.2% from fiscal 2023. Almost all of this $100 million growth came from HBM revenues.
Systems Segment Growth
The systems segment saw a sequential increase in fourth-quarter revenue, driven by customer innovation in areas like quantum computing and high-performance compute.
Lowlights
Sequential Revenue and Margin Decline
FormFactor reported sequentially lower fourth quarter revenue, gross margin, and non-GAAP earnings per share, driven by a reduction in Foundry and Logic probe-card revenue.
Challenges in China Due to Export Controls
Recent export controls have limited FormFactor's ability to ship probe cards for advanced node DRAM designs to China, resulting in a significant reduction in non-HBM DRAM revenue.
Foundry and Logic Revenue Weakness
The Foundry and Logic probe-card market experienced a fourth-quarter reduction, with no Foundry and Logic manufacturers as a 10% customer for the first time in many years.
Gross Margin Pressure
The lower level of Foundry and Logic probe card demand combined with robust levels for DRAM probe cards produced a challenging product mix, leading to gross margins below the target of 47%.
Company Guidance
During the FormFactor Q4 2024 earnings call, the company provided guidance that highlighted a sequential reduction in demand for non-HBM DRAM probe-cards, driven by export controls affecting sales to China, which was a significant revenue source. They reported a Q4 revenue of $189.5 million, a 9% decrease from Q3, but a 12.7% increase year-over-year. For fiscal 2024, revenues totaled $764 million, up 15.2% from the previous year, largely due to a $100 million increase from HBM revenues. The non-GAAP gross margin for Q4 was 40.2%, and non-GAAP EPS was $0.27. The outlook for Q1 2025 anticipates revenues of $170 million and a non-GAAP gross margin of 38%. The company remains optimistic about growth in 2025, driven by the transition to HBM4, and new customer qualifications, although challenges remain due to market conditions in client PCs and mobile handsets.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.