Formfactor (FORM) AI Stock Analysis

• Market Cap: $2.30B
• Dividend Yield: N/A
• Average Volume (3M): 998.37K
• Price to Earnings (P/E): 43.1
• Beta (1Y): 2.10
• Revenue Growth: 15.33%
• EPS Growth: -47.04%
• Country: US
• Employees: 2,238
• Sector: Technology
• Sector Strength: 65
• Industry: Semiconductors
• EPS (TTM): 0.23
• Shares Outstanding: 77,076,645
• 10 Day Avg. Volume: 726,329
• 30 Day Avg. Volume: 998,374
• PEG Ratio: -1.94
• Price to Book (P/B): 2.42
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 43.96
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $38.00
• Price Target Upside: 27.52% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

FormFactor's overall stock score of 66 reflects its strong financial health and significant growth prospects, particularly in high bandwidth memory and co-package optics. However, the stock faces challenges such as declining margins, tariffs, and negative technical indicators. The high P/E ratio suggests overvaluation, limiting short-term upside potential. Positive guidance and strategic acquisitions provide some optimism, yet operational and geopolitical risks weigh on the outlook.

Positive Factors

Customer Expansion

Growing exposure to a 2nd HBM customer is a tailwind, though majority of demand remain centered with the company's biggest customer.

Market Leadership

FormFactor is poised to exit 2024 at revenue levels roughly on par with 2021, thanks to its market-leading position supplying into the HBM DRAM market.

Recovery and Growth

FormFactor reported a beat-and-raise quarter and delivered a rare V-shaped recovery after a disappointing print.

Negative Factors

Customer Challenges

The company faces challenges with its former top customer, INTC, which is tracking below norms with uncertain recovery timing.

Guidance and Expectations

Guidance includes ~$5M of lost revenue from tariffs (mainly customers in China) and 1ppt impact on GM as a result.

Tariff and Regulation Impact

US BIS shipment restrictions have significantly impacted China's demand for probe cards, contributing to a year-over-year growth headwind.

Formfactor Business Overview & Revenue Model

Company Description

FormFactor, Inc. designs, manufactures, and sells probe cards, analytical probes, probe stations, metrology systems, thermal systems, and cryogenic systems to semiconductor companies and scientific institutions. It operates in two segments, Probe Cards and Systems. The company offers probe cards to test various semiconductor device types, including systems on a chip products, mobile application processors, microprocessors, microcontrollers, and graphic processors, as well as radio frequency, analog, mixed signal, image sensor, electro-optical, dynamic random access memory, NAND flash memory, and NOR flash memory devices; and analytical probes, which are used for a range of applications, including device characterization, electrical simulation model development, failure analysis, and prototype design debugging for universities, research institutions, semiconductor integrated device manufacturers, semiconductor foundries, and fabless semiconductor companies. It also provides probing systems for semiconductor design engineers to capture and analyze accurate data; surface metrology systems for the development, production, and quality control of semiconductor products; thermal subsystems, such as thermal chucks and other test systems used in probe stations and other applications; and precision cryogenic instruments, semiconductor tests, and measurement systems. In addition, the company offers on-site probe card maintenance and service training, seminars, and telephone support services. The company markets and sells its products through direct sales force, manufacturers' representatives, and distributors in the United States, Taiwan, South Korea, China, Japan, Europe, rest of Asia-Pacific, and internationally. FormFactor, Inc. was incorporated in 1993 and is headquartered in Livermore, California.

How the Company Makes Money

FormFactor generates revenue primarily through the sale of its probe card products, which are used by semiconductor manufacturers to test ICs during the fabrication process. These products are essential for ensuring the quality and functionality of semiconductors before they are packaged and shipped to customers. The company also earns revenue from its analytical probes and engineering systems, which are utilized in research and development as well as in production environments to enhance the efficiency and accuracy of semiconductor testing. FormFactor's significant partnerships with major semiconductor manufacturers and foundries contribute to its earnings by securing long-term contracts and ensuring a steady demand for its products. Additionally, the company's focus on innovation and the advancement of testing technologies helps maintain its competitive edge and drives growth in its revenue streams.

Formfactor Financial Statement Overview

Summary

FormFactor shows stable revenue and profitability but faces pressure on margins and cash flows. The balance sheet reflects low debt levels, indicating financial stability. However, challenges in operational efficiency and cash flow management are areas that require improvement for sustained growth.

Income Statement

Formfactor shows a stable Gross Profit Margin of approximately 40% over the periods, indicating efficiency in cost management. However, the Net Profit Margin has seen a decline from the previous year, primarily due to a decrease in EBIT, which has impacted profitability. The Revenue Growth Rate is modest but positive, reflecting steady growth in sales, though the latest TTM shows a slight dip. Margins such as EBIT and EBITDA have decreased in the latest TTM, signaling potential challenges in operational efficiency.

Balance Sheet

The company maintains a strong balance sheet with a low Debt-to-Equity Ratio, highlighting financial stability and low leverage. ROE has decreased slightly, aligning with the dip in net income, yet remains healthy. The Equity Ratio indicates a robust capital structure with a high proportion of equity funding the assets, reducing financial risk.

Cash Flow

Operating Cash Flow remains positive, although it has decreased compared to the previous year, which could constrain liquidity if the trend continues. Free Cash Flow has decreased in the TTM period, reflecting lower operational efficiency and capital expenditure management. The ratio of Operating Cash Flow to Net Income suggests reasonable cash generation from earnings, albeit with room for improvement.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
766.23M	763.60M	663.10M	747.94M	769.67M	693.62M
	Gross Profit
309.52M	307.92M	258.58M	296.01M	322.77M	287.92M
	EBIT
46.22M	64.78M	82.76M	54.91M	98.04M	83.79M
	EBITDA
107.14M	119.54M	134.53M	104.64M	150.79M	140.68M
	Net Income Common Stockholders
54.23M	69.61M	82.39M	50.74M	83.92M	78.52M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
298.99M	360.02M	328.32M	238.13M	276.06M	255.03M
	Total Assets
1.16B	1.15B	1.11B	1.01B	1.02B	963.22M
	Total Debt
25.55M	39.23M	48.15M	50.37M	63.27M	69.19M
	Net Debt
-104.33M	-151.50M	-129.67M	-55.75M	-87.73M	-118.03M
	Total Liabilities
190.29M	198.45M	197.99M	199.94M	204.74M	219.13M
	Stockholders Equity
965.87M	947.77M	908.80M	808.28M	815.78M	744.08M
Cash Flow		Free Cash Flow
53.05M	79.10M	8.57M	66.53M	72.87M	113.39M
	Operating Cash Flow
78.05M	117.53M	64.60M	131.78M	139.36M	169.26M
	Investing Cash Flow
-114.32M	-33.48M	29.05M	-78.69M	-124.74M	-98.92M
	Financing Cash Flow
-53.08M	-64.61M	-22.71M	-95.93M	-47.20M	-30.93M

Formfactor Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 29.80
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FORM, the sentiment is Positive. The current price of 29.8 is above the 20-day moving average (MA) of 27.92, above the 50-day MA of 29.23, and below the 200-day MA of 39.78, indicating a neutral trend. The MACD of 0.29 indicates Negative momentum. The RSI at 55.46 is Neutral, neither overbought nor oversold. The STOCH value of 57.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FORM.

Formfactor Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CAMT	77 Outperform	$3.07B	27.64	23.12%	2.00%	36.10%	48.15%
VECO	73 Outperform	$1.12B	18.05	8.68%	―	3.30%	―
SIMO	70 Outperform	$1.77B	18.87	12.33%	3.72%	10.78%	58.82%
FORM	66 Neutral	$2.30B	43.07	5.74%	―	15.33%	-47.04%
Sector *	60 Neutral	$10.96B	10.27	-6.73%	2.97%	7.73%	-11.60%
KLIC	51 Neutral	$1.68B	88.05	2.29%	2.54%	-6.17%	―
AMBA	47 Neutral	$2.28B	―	-20.89%	―	25.78%	32.95%