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MKS Instruments, Inc. Message Board

  • city_slicker2000 city_slicker2000 Aug 10, 2000 6:05 PM Flag

    MKSI is now the worst investment I have

    ever made.

    I have been investing in the
    stock market for about 8 years. Most of my stocks have
    made me money. I had two big losers, BMCS and now
    MKSI.

    Any "real" thoughts on the outlook for mksi???? Still
    holding.

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    • Thanks for the information. I didn't mess with
      using a net cash adjustment -- just the unadjusted
      P/S.

      Looks like some others decided MKSI was a good buy.
      It's trading up today. Not enormous volume, but pretty
      good considering the rest of the sector and declines
      in NASDAQ.

    • >>MKSI is now the worst investment I have
      ever made....Any "real" thoughts on the outlook for
      mksi???? Still holding.>>

      Okay, let's take a
      look at your "worst investment":

      First of all,
      MKSI never traded as low as 16.50.

      Second, the
      outlook for MKSI (the company) is great. Semi equip
      stocks have been dumped recently, so the stock is way
      oversold. But the company's business is doing fine.
      Consider that the long term growth rate of the semi equip
      business is around 30% a year. MKSI has the advantage of a
      more widely diversified business than most, so its
      downcycles are less extreme. (MKSI had positive earnings
      thoughout the last one.) MKSI has a dominant position in
      its niche business and has the advantage of selling
      to Applied Materials rather than having to compete
      with them.

      To get a grounding in the numbers,
      check out the growth
      forecasts:
      http://biz.yahoo.com/z/a/m/mksi.html

      The consensus forecast is for MKSI to earn $1.72 this
      year and $2.33 next year. Note that the earnings
      estimates have been rising and that the company has a
      consistent history of beating the estimates. The stock is
      currently trading at about 13X trailing earnings, under 10X
      CY2000 earnings and about 7X CY2001 earnings. Notice
      also the high rates of growth: +123% this year and 36%
      next year. Compare that with the the numbers for the
      S&P500. MKSI offers considerably greater growth with a
      much lower PE. This is what is called a screaming
      bargain.

      I'd also recommend looking at some of MKSI's
      numbers:
      http://biz.yahoo.com/p/m/mksi.html

      MKSI has a Price/Book ratio of 2.97
      MKSI has a
      Price/Sales of 1.75
      MKSI has a trailing PE of 13.2
      MKSI
      is at 6.0X its cash.
      MKSI's Return on Equity is
      27.5%.
      MKSI's Return on Assets is 19.2%.

      If you want
      still more information, you can check the ratio
      comparisons:
      http://yahoo.marketguide.com/mgi/ratio/A1E45.html

      Notice that MKSI has superior valuation, growth,
      financial strength, and net profit margins (despite a
      higher effective tax rate) than the industry average.
      Note also that its numbers are better than the S&P500
      and the overall technology sector.

      If you
      have patience, just sit and wait for the stock price
      to recover. Summer is a traditionally slow time for
      semi equip stocks, so there is also a tradition for
      chip and chip equipment stocks to sell off during the
      summer months. If you have patience and an opportunistic
      streak, buy more while it is cheap.

      Given the
      combination of high growth and low price, the stock has
      enormous appreciation potential. It also has relatively
      little risk. Sure, the price might move down a bit, but
      over time this one will make you a lot of money. When
      you get to buy the stock this cheap, most of the risk
      is already priced out of it. That leaves you with
      the appreciation potential.

    • guessing that MKSI might hit $16, or even as low
      as $14. I arrived at the number by comparing it to
      other semi-conductor equipment makers and seeing how
      low they got on a P/S basis. So the outlook for the
      stock in the near-term is murky, if not downright
      ugly.

      However, the outlook for the business is incredible. High
      single digit growth for the next 2 q's, and accelerating
      into the double digits after that. It is not unlikely
      that MKSI makes $2.50/share next year, with a much
      more diverse market than most semi-equipment
      companies.

      That all being said, I would love to know where the
      bottom is, so I can buy there. There is a good chance at
      another 4 ugly market weeks, so that must be taken into
      account as well. This is a very tough call right
      now.

      Cheers,

      TYD

      • 2 Replies to twoyeardouble
      • >>Look at message 328. I have been guessing
        that MKSI might hit $16, or even as low as $14. I
        arrived at the number by comparing it to other
        semi-conductor equipment makers and seeing how low they got on a
        P/S basis.>>

        I looked at message 328,
        and you only predicted $16. You mentioned you came up
        with the number by comparing it with other semi equip
        makers on a P/S basis. Would you care to share the
        comparisons?

        At 16, MKSI would have a P/S ratio of 1.67. In my
        informal check of other semi equips, I could only find 4
        with P/S ratios that low: ASTX, CFMT, COHU and KLIC.
        IMO, MKSI has much more attractive prospects.
        Meanwhile, most semi equip companies have P/S numbers that
        are considerably higher. I think MKSI could double in
        price and still remain a bargain based on its
        P/S.

        As for MKSI's outlook, the company's guidance is for
        sequential revenue growth in the high single-digit to low
        double-digit range -- so most likely about 10%. Their
        expectation is that the growth rate will be higher in the
        following quarters.

        Because of the volatility in
        semi equip companies, it is hard to know if MKSI has
        reached its low. But it is pretty easy to know it's a
        bigtime bargain at this level. One thing for sure, many
        people will be expecting it to go lower when it actually
        bottoms.

        At these prices, the upside potential greatly
        outweighs the downside risk. To put it differently, what is
        the case for selling? If you can't come up with a
        good reason for people to sell, you can't reasonably
        expect them to sell. So perhaps there has been a lot of
        negativity and fear contributing to a negative environment
        for semi equips and other tech stocks. But even
        irrational pessimism and panic will only take it down just
        so far. Eventually, everyone who will sell has sold,
        and the only one's left are the bargain hunter
        buyers.

        We may be there now.

      • You seem to know as much as anyone about MKSI.
        About six months ago, I got in at 38 and out at 44,
        when the gear makers were rolling. Now that gear
        makers are no longer favored, I'd like to know what
        percentage of MKSI's revenue is connected with semiconductor
        equipment. I didn't see anything in the earnings report or
        on the company's website about that. I tried to find
        a 10-K or 10-Q, but to no avail so far. I thought
        you might know off the top of your head.

        By
        the way, about a week ago I made the temporary
        mistake of snaring a decent chunk of ESIO at around 35
        and another chunk of CRPB at 14 1/2. Now I've learned
        to begin the bottom feeding with a nibble, with
        additional nibbles as the bottom lowers, and which I'm
        inclined to do with MKSI, depending on the answer to my
        inquiry.

        Thanks in advance for any input.

    • I would hold at this level for a bounce at year
      end. This stock has been a baby thrown out with the
      bath water. The outlook for this company is quite
      good. Next quarter earnings report will be excellent
      and this stock will move up. These chip stocks are
      extremely volatile and can move up fast. IMHO

 
MKSI
41.41+0.47(+1.15%)Jun 29 4:00 PMEDT