NVIDIA Corp. (NVDA) released its second-quarter earnings results after the closing bell last Thursday. Although, the earnings report was positive, the stock still took a dip to finish the week down about 6%. In today’s blog, I’ll examine these results and discuss why now is still a good time to buy this market leader.
Founded in 1993 and headquartered in Santa Clara, CA, NVIDIA operates as a worldwide visual computing company. Its products are used in everything from PCs to tablets and other mobile devices, primarily for gaming purposes. However, its processors also assist professionals in video editing, special effects and other creative applications. In addition, the NVIDIA Tegra Processor segment can be used in advanced driver assistance systems and digital cockpits for cars. The company sells its products primarily to original equipment manufacturers, design manufacturers, system builders, motherboard manufacturers, add-in board manufacturers and retailers/distributors.
Compared with this same quarter last year, NVIDIA’s revenue jumped 56% to $2.23 billion in the second quarter of 2017. This beat the $1.96 billion consensus estimate by 13.8%. Plus, over the same period, adjusted earnings skyrocketed a massive 91% to $1.01 per share. Analysts were expecting earnings of only $0.70 per share. So, NVIDIA posted a whopping 44.3% earnings surprise!
Looking ahead to next quarter, NVIDIA expects revenue to be $2.35 billion, plus or minus two percent. This is well above the Street view of $2.13 billion in revenue. NVIDIA also declared its next quarterly dividend. Shareholders of record on August 24 will receive $0.14 per share on September 18. As you can imagine, this is all good news for the chip maker’s shareholders.
So, with such a strong earnings report, why were NVIDIA’s shares still down about 6% at the end of last week? The answer to this question is simple: profit taking. With many investors cashing in their chips on this market leader, right now is the ideal time for savvy investors like you and me to get in before the next run up starts.
That’s precisely why NVDA remains a good buy on dips like the one we saw last week. In fact, the company’s overall fundamental strength is reflected in its A-rating in my Portfolio Grader tool.
And that’s good news for my Blue Chip Growth readers who have been invested in NVIDIA’s meteoric rise for over a year now. They’ve already been rewarded with a massive 270% return on this one, single company.
But if you aren’t ready to commit to Blue Chip Growth yet, you can always stay tuned in right here to this blog to discover additional insights and answers to your investing questions. I look forward to speaking with you again tomorrow.