A month has gone by since the last earnings report for Universal Display Corp. (OLED). Shares have lost about 4.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Universal Display due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Universal Display Q1 Earnings & Revenues Trump Estimates
Universal Display Corporation delivered first-quarter 2019 adjusted earnings of 66 cents per share, surpassing the Zacks Consensus Estimate of 26 cents.
Revenues increased 101.4% to $87.8 million and outpaced the Zacks Consensus Estimate of $61 million.
The company adopted a new Accounting Standards Codification ("ASC") 606 using full retrospective method from the first quarter of 2018.
Material sales (62.1% of total revenues) increased 115.8% from the year-ago quarter to $54.5 million. Green emitters sales (including yellow-green emitters) were $41.6 million, up 143.3% year over year. Red emitter sales were $12.8 million, up from $8 million reported in the year-ago quarter.
Royalty and license fees (34.5% of total revenues) increased 90.2% year over year to $30.3 million. Adesis revenues came in at $3 million during the reported quarter compared with $2.4 million reported in the year-ago quarter.
Gross margin during the quarter under review came in at 81.9% compared with 82.9% reported in the year-ago quarter. Material gross margin contracted to 76% compared with 77% reported in the year-ago quarter.
Operating expense during the reported quarter came in at $15.8 million compared with $7.5 million reported in the year-ago quarter.
Operating margin came in at 39.2% compared with 10.4% reported in the year-ago quarter.
As on Mar 31, 2019, Universal Display had cash and cash equivalents (including short-term investments) of $526.6 million compared with $515.3 million at the end of previous quarter.
The company generated $34 million as cash from operating activities during the reported quarter.
The company recently approved a quarterly cash dividend payment of 10 cents per share to be paid on Jun 28, 2019 to shareholders as on Jun 14, 2019.
Universal Display updated guidance for fiscal 2019. The company now anticipates revenues between $345 million and $365 million under ASC 606 (previously $325 million and $350 million). Under ASC 605, the company expects revenues to be in the range of $405 million to $425 million (previously $395 million to $420 million).
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -6.08% due to these changes.
At this time, Universal Display has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile 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.
Universal Display has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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