Sandisk (SNDK +1.97%) stock took its investors on a rollercoaster ride Friday. Opening down 5%, the stock quickly bounced in morning trading, then dropped, then floated toward noon -- then surged in the afternoon. Ultimately, the popular computer memory-maker closed up 8.2%.
Earnings were the reason.
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Sandisk Q3 earnings
Let's start with the (very) good news. Sandisk reported a $23.03 per share in GAAP profit on sales of $6 billion last night, crushing analyst targets for $14.66 per share (non-GAAP) and $4.7 billion in sales. Quarterly revenue nearly doubled year over year, up 97%.
CEO David Goeckeler says Sandisk has hit an "inflection point" in both sales and earnings as it focuses its efforts on selling semiconductors into "the highest-value end markets." (Which is to say, memory for use in conjunction with artificial intelligence chips.) Going forward, Goeckeler is promising investors "structurally higher and more durable earnings power."
NASDAQ: SNDK
Key Data Points
What's next for Sandisk stock?
Is Goeckeler saying Sandisk has ended the boom-and-bust loop of cyclical semiconductor sales and everything's going higher from here for Sandisk? It sure sounds like it -- and I admit that I worry just the tiniest bit that this might be irrational exuberance talking.
Still, in the near term, all systems look go for Sandisk. Guidance for the coming fourth quarter is for sales to nearly double sequentially to $8 billion (plus or minus $250 million). Gross profit margins should climb from 78.4% in Q3 to nearly 80% in Q4. Earnings per share might reach $30 to $33. If Sandisk lands anywhere near those targets, the company's going to blow past analyst forecasts for $46.68 per share in profit this year.
And Sandisk stock, at 24 times earnings, could still be cheap enough to buy.
