Vishay Intertechnology (NYSE:VSH) Misses Q4 Analysts' Revenue Estimates

Petr Huřťák /
2023/02/08 7:17 am EST

Semiconductor manufacturer Vishay Intertechnology (NYSE:VSH) fell short of analyst expectations in Q4 FY2022 quarter, with revenue up 1.45% year on year to $855.3 million. Vishay Intertechnology made a GAAP profit of $72.8 million, improving on its profit of $36.8 million, in the same quarter last year.

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Vishay Intertechnology (VSH) Q4 FY2022 Highlights:

  • Revenue: $855.3 million vs analyst estimates of $882.6 million (3.1% miss)
  • EPS (non-GAAP): $0.69 vs analyst expectations of $0.80 (13.2% miss)
  • Revenue guidance for Q1 2023 is $845 million at the midpoint, below analyst estimates of $863.7 million
  • Free cash flow of $14.1 million, down 89.4% from previous quarter
  • Inventory Days Outstanding: 93, up from 88 previous quarter
  • Gross Margin (GAAP): 29.1%, up from 27.3% same quarter last year

“During the fourth quarter we began to see indications of an inventory correction, which impacted revenues and our gross profit margin. Given that over 60% of our revenue is derived from the automotive and industrial ends markets which are experiencing strong demand from mega electrification trends, we are anticipating a narrow inventory correction in the first half of the year,” said Joel Smejkal, president and CEO.

Named after the founder's ancestral village in present-day Lithuania, Vishay Intertechnology (NYSE:VSH) manufactures simple chips and electronic components that are building blocks of virtually all types of electronic devices.

Demand for analog chips is generally linked to the overall level of economic growth, as analog chips serve as the building blocks of most electronic goods and equipment. Unlike digital chip designers, analog chip makers tend to produce the majority of their own chips, as analog chip production does not require expensive leading edge nodes. Less dependent on major secular growth drivers, analog product cycles are much longer, often 5-7 years.

Sales Growth

Vishay Intertechnology's revenue growth over the last three years has been unremarkable, averaging 10.8% annually. And as you can see below, last year has been even less strong, with quarterly revenue growing from $843.1 million to $855.3 million. Semiconductors are a cyclical industry and long-term investors should be prepared for periods of high growth, followed by periods of revenue contractions (which can sometimes offer opportune times to buy).

Vishay Intertechnology Total Revenue

This was a slow quarter for Vishay Intertechnology, with revenue growth of just 1.45%, which missed analyst estimates by 3.1%.This marks 10 straight quarters of revenue growth, which means the current upcycle has had a good run, as a typical upcycle tends to be 8-10 quarters.

Vishay Intertechnology's revenue growth was positive this quarter, but the company is guiding to decline of 1.03% YoY next quarter, while analysts expect to see declines of 3.15% over the next twelve months.

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Product Demand & Outstanding Inventory

Days Inventory Outstanding (DIO) are an important metric for chipmakers, as it reflects the capital intensity of the business 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. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise the company may have to downsize production.

Vishay Intertechnology Inventory Days Outstanding

This quarter, Vishay Intertechnology’s inventory days came in at 93, 9 days above the five year average, suggesting that that inventory has grown to higher levels than what we used to see in the past.

Key Takeaways from Vishay Intertechnology's Q4 Results

With a market capitalization of $3.4 billion Vishay Intertechnology is among smaller companies, but its more than $916.1 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.

We enjoyed seeing Vishay Intertechnology’s improve their gross margin materially this quarter. That feature of these results really stood out as a positive. On the other hand, it was unfortunate to see that the revenue and revenue guidance for the next quarter missed analysts' expectations. Overall, this quarter's results could have been better. The company is down 4.16% on the results and currently trades at $23.01 per share.

Vishay Intertechnology may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.