IPG (IPGP) Down 11.4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for IPG Photonics (IPGP). Shares have lost about 11.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is IPG due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
IPG Photonics Q4 Earnings Beat, Revenues Decrease Y/Y
IPG Photonics reported fourth-quarter 2022 adjusted earnings of $1.08 per share, beating the Zacks Consensus Estimate by 18.7%.
IPG Photonics reported a GAAP loss of $1.91 per share prior to adjustments related to inventory-related charges, impairment of long-lived assets in Russia, restructuring charges primarily related to IPGP’s Russia operations, foreign exchange transaction gains and the gain on sale of assets, and discrete income tax adjustments.
Revenues of $333.5 million decreased 8.5% on a year-over-year basis but beat the consensus mark by 5.5%. Emerging growth product sales accounted for 46% of revenues.
Unfavorable forex hurt revenue growth by 7%, whereas business divestitures reduced it by roughly 2%.
Quarterly Details
Materials processing (89% of total revenues) decreased 6% year over year. The downside can be attributed to lower revenues from cutting applications in China and Europe, partially offset by higher sales in welding and solar cell applications.
Revenues from other applications decreased 23% year over year due to lower revenues from advanced applications and the divestiture of the telecom transmission product lines.
Sales of high-power CW lasers were down 13% year over year due to lower demand in high-power cutting applications. Pulsed laser sales declined 9% year over year due to lower demand in cutting and marking applications.
Sales decreased 21% in Europe, 3% in North America and 15% in China on a year-over-year basis. Sales increased 2% year over year in Japan.
Total backlog was $811 million, consisting of $501 million of orders with firm shipment dates and $310 million of frame agreements. Total backlog increased 11% year over year, driven by a 28% increase in frame agreements and a 3% rise in orders with firm shipment dates. Fourth-quarter book-to-bill was slightly below 1.
IPG Photonics reported a gross margin of 40.4%.
Balance Sheet
As of Dec 31, 2022, IPG Photonics had $698.2 million in cash and cash equivalents compared with $869.3 million as of Sep 30, 2022.
Guidance
For first-quarter 2023, IPG Photonics anticipates sales to be $310-$340 million. Earnings are projected between 90 cents and $1.20 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, IPG has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, IPG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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IPG Photonics Corporation (IPGP) : Free Stock Analysis Report
