STMicroelectronics FY 2025 Margin Compression Challenges Bullish Earnings Growth Narrative

How STMicroelectronics (ENXTPA:STMPA) Just Shaped Its FY 2025 Story

STMicroelectronics (ENXTPA:STMPA) closed FY 2025 with fourth quarter revenue of US$3.3b and a basic EPS loss of US$0.03, setting a mixed headline for investors digesting the latest print. Over the past six quarters, the company has seen quarterly revenue range from US$2.5b to US$3.3b, while basic EPS has swung between a profit of about US$0.39 and a loss of roughly US$0.11. This underscores how sensitive earnings have been to changes in profitability. With trailing 12 month net margins running at 1.4% after a sizeable one off loss, this set of results keeps the spotlight firmly on how durable the company’s margins really are.

See our full analysis for STMicroelectronics.

With the latest numbers on the table, the next step is to see how this earnings profile lines up with the widely followed growth and risk narratives around STMicroelectronics and where those stories may need updating.

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Margins Hit By 1.4% Net Profit Level

• Over the last 12 months, STMicroelectronics generated about US$11.8b of revenue and US$166 million of net income, which works out to a 1.4% net profit margin compared with 11.7% in the prior year period mentioned in the risk summary.
• Bears point to the margin compression as a key concern, and the numbers give them material support:
  • Net income for FY 2025 swung between a profit of US$237 million in Q3 and a loss of US$97 million in Q2, which sits uncomfortably next to the earlier trailing 12 month net income of US$1.6b reported for 2024 Q4.
  • The risk summary also flags that earnings over the past five years declined about 6.4% per year, so the current 1.4% margin and recent losses in two of the last four quarters strengthen the bearish argument about earnings quality and consistency.

US$376m One Off Loss Distorts Profit Picture

• The analysis highlights a one off loss of US$376 million in the last 12 months, which had a large impact on reported profitability relative to the US$166 million of trailing net income.
• What is interesting for a more bullish angle is how this single item shapes the story:
  • Without separating that US$376 million charge, the trailing figures fold it into the 1.4% margin, making the recent profitability look much weaker alongside the US$11.8b revenue base.
  • Supporters arguing a bullish case could say that a one off of this size relative to trailing net income is masking the underlying run rate, but the mixed quarterly pattern, including losses in Q2 and Q4 2025, means the data does not give a clean read in their favor.

Revenue Stability Versus EPS Swings

• Quarterly revenue over FY 2025 stayed in a fairly tight band between US$2.5b and US$3.3b, while basic EPS moved from a profit of US$0.27 in Q3 2025 to a loss of US$0.11 in Q2 2025 and a small loss of US$0.03 in Q4 2025.
• Putting this alongside the AI generated growth oriented narrative creates a clear tension:
  • The analysis references forecasts for earnings growth of about 37.2% a year and revenue growth of roughly 8.6% a year, yet the trailing 12 month basic EPS slipped from US$2.54 at 2024 Q3 to US$0.19 at 2025 Q4.
  • That contrast between steady revenue in the US$11.8b range and much lower trailing EPS means any bullish view built around strong growth expectations has to square those forecasts with the recent pattern of earnings volatility and compressed profitability.

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Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on STMicroelectronics's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

STMicroelectronics is facing thin 1.4% net margins, a sizeable US$376 million one off loss and uneven EPS, which all raise questions about earnings reliability.

If that kind of choppy profit profile makes you cautious, check out stable growth stocks screener (2166 results) to focus on companies with steadier revenue and earnings patterns that can help balance your ideas.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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