Lam Research Corporation (NASDAQ: LRCX) stock price jumped almost 3.5x from $136 in 2018 end to $467 currently, primarily due to favorable changes in its P/S multiple. Additionally, the company witnessed a rise in revenue over this period, and revenue per share has increased, helped by a drop in the outstanding share count.
In our interactive dashboard, Why Lam Research Stock Moved: LRCX Stock Has Gained 243% Since 2018, we break down the factors behind this move.
(A) LRCX’s Total Revenue has grown 49% from $11.1 billion in 2018 to $16.5 billion on an LTM basis
- LRCX’s total revenue initially dropped from $11.1 billion in FY ’18 to $9.7 billion in FY ’19, before jumping strongly to $14.6 billion in FY ’21, and currently stands even higher at $16.5 billion (LRCX’s fiscal year ends in June).
- The company is a leading supplier of wafer fabrication equipment and related services to the semiconductor industry.
- Despite weak numbers in FY ’19 and FY ’20, the company’s recent jump in sales means that revenue numbers now stand 50% higher than its FY ’18 levels.
- Additionally, as of FY ’21, LRCX’s top segment is the systems segment, making up around 67% of the company’s total sales.
- For details about LRCX revenues and comparison to peers, see Lam Research (LRCX) Revenue Comparison
(B) Revenue per share (RPS) increased 72% from $68.54 in 2018 to $117.55 currently
- LRCX revenue rose from $11.1 billion in 2018 to $16.5 billion currently, while the outstanding share count decreased from 161.6 million in 2018 to 140.6 million currently.
- Due to this, RPS has risen from $68.54 in FY ’18 to $117.55 currently.
(C) Price-To-Sales (P/S) multiple for LRCX rose strongly from 1.7x in 2018 to 6.9x by 2021 end, but has pulled back to 4x currently, still more than 2x higher than its 2018 level
- Despite LRCX’s weak performance between 2018-end to 2020, its P/S multiple rose strongly from 1.7x in 2018 to as high as 6.6x in 2020, on the back of rising investor expectations surrounding a revival in demand for the company’s products.
- With the jump in sales in FY ’21, the P/S multiple still came in at 6.9x in late 2021.
- However, amidst current geopolitical tensions, which have led to increased uncertainty in the broader markets, the P/S multiple has pulled back, currently standing at around 4x.
- For additional details about the company stock returns and comparison to peers, see Lam Research (LRCX) Stock Return Comparison.
|S&P 500 Return||-2%||-7%||99%|
|Trefis Multi-Strategy Portfolio||0%||-8%||263%|
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