Lam Research Stock Has Risen 3x Since Late 2018: Here’s Why

LRCX: LAM Research logo
LAM Research

Lam Research Corporation (NASDAQ: LRCX) stock price soared almost 3x from $136 in 2018 end to $406 currently, primarily due to favorable changes in its P/S multiple. Additionally, the company, a leading supplier of wafer fabrication equipment and related services to the semiconductor industry, witnessed a rise in revenue over this period, and revenue per share has increased, helped by a drop in the outstanding share count. Due to this, the stock has managed to outperform the S&P, which returned roughly 55% over this period.

In our interactive dashboard, Why Lam Research Stock Moved: LRCX Stock Has Gained 198% Since 2018, we break down the factors behind this move.

(A) LRCX’s Total Revenue has grown 51% from $11.1 billion in FY 2018 to around $16.7 billion on an LTM basis

  • LRCX’s total revenue first dropped from $11.1 billion in FY ’18 to $9.7 billion in FY ’19, before bouncing back strongly to $14.6 billion in FY ’21, and currently stands even higher at $16.7 billion (LRCX’s fiscal year ends in June).
  • 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.
  • As of FY ’21, LRCX’s largest segment is the systems segment, making up around 67% of the company’s net sales.
  • For details about LRCX revenues and comparison to peers, see Lam Research (LRCX) Revenue Comparison
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(B) Revenue per share (RPS) increased 75% from $68.54 in 2018 to $120.23 currently

  • LRCX revenue rose from $11.1 billion in 2018 to $16.7 billion currently, while the outstanding share count decreased from 161.6 million in 2018 to a little under 140 million currently.
  • Due to this, RPS has risen from $68.54 in FY ’18 to $120.23 currently.

(C) Price-To-Sales (P/S) multiple for LRCX surged from 1.7x in 2018 to 6.8x by 2021 end, but has pulled back to 3.4x currently, still 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 6.5x in 2020, on the back of rising investor expectations surrounding a jump in demand for the company’s products.
  • However, due to the increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 3.4x.
  • For additional details about the company stock returns and comparison to peers, see Lam Research (LRCX) Stock Return Comparison.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Jul 2022
MTD [1]
YTD [1]
Total [2]
 LRCX Return -5% -44% 284%
 S&P 500 Return 1% -20% 71%
 Trefis Multi-Strategy Portfolio 3% -21% 211%

[1] Month-to-date and year-to-date as of 7/12/2022
[2] Cumulative total returns since the end of 2016

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