GlobalFoundries is the IBD Stock Of The Day as the contract chipmaker surges higher after an upbeat third-quarter earnings report. GFS stock is approaching a formal buy point.
Early Tuesday, GlobalFoundries beat Wall Street's targets for the third quarter and guided much higher for profits in the current period.
The Malta, N.Y.-based company earned an adjusted 67 cents a share on sales of $2.07 billion in the September quarter. Analysts polled by FactSet expected GlobalFoundries earnings of 62 cents a share on sales of $2.05 billion. In the year-earlier period, GlobalFoundries earned 7 cents a share on sales of $1.7 billion.
For the current quarter, GlobalFoundries now forecasts adjusted earnings of $1.34 a share on sales of $2.08 billion. That's based on the midpoint of its outlook. Wall Street had predicted earnings of $1.05 a share on sales of $2.086 billion in the fourth quarter.
GFS Stock Rises After Report
On the stock market today, GFS stock surged 8.6% to 61.12.
GFS stock has been consolidating for the past 13 weeks at a buy point of 66.06, according to IBD MarketSmith charts.
Aggressive investors could use the strong move above the high point of a recent downtrend, or 61.14, as an early entry.
In a positive sign, the stock's relative strength line is at its highest level since late March. The relative strength line compares a stock's performance to that of the S&P 500.
Predicts Strong Year Of Growth, Profits
"In the third quarter, the GF team continued to execute on its commitments to customers and shareholders despite ongoing macroeconomic and geopolitical challenges," Chief Executive Thomas Caulfield said in a news release.
"Our revenue grew 22% year over year, and we delivered record gross, operating and net profits, making significant progress towards our long-term financial model," Caulfield said. "We remain on track to deliver a strong year of growth and profitability."
GlobalFoundries' largest end-market by revenue in the third quarter was smart mobile devices, at 46% of sales. The next largest segment was home and industrial Internet of Things at 19% of sales. Communications infrastructure and data centers was the third largest group at 18% of sales.
Semiconductor Stocks Moving On Earnings
Other semiconductor stocks moving on earnings news Tuesday included Diodes and SkyWater Technology, which posted results late Monday.
Diodes delivered roughly in-line third-quarter results and guidance. SkyWater posted better-than-expected third-quarter results and outlook. Diodes climbed 3.3% to 75.30 on Tuesday. SkyWater rocketed 31.6% to 11.37.
GFS stock ranks ninth out of 32 stocks in IBD's semiconductor manufacturing industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 76 out of 99. Diodes ranks 10th in the group and SkyWater ranks No. 28.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
