Why Is IPG (IPGP) Up 10.2% Since Last Earnings Report?
A month has gone by since the last earnings report for IPG Photonics (IPGP). Shares have added about 10.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is IPG due for a pullback? 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' Q3 Earnings Beat, Revenues Decrease Y/Y
IPG Photonics reported third-quarter 2023 earnings of $1.16 per share, beating the Zacks Consensus Estimate by 14.9%. The figure declined 21.1% year over year.
Revenues of $301.4 million decreased 13.6% on a year-over-year basis and lagged the consensus mark by 3.68%. Emerging growth product sales accounted for 42% of revenues.
Unfavorable forex hurt revenue growth by 2%.
Quarterly Details
Materials processing (88% of total revenues) decreased 15% year over year. The downside can be attributed to lower revenues from cutting, welding and marking applications in China.
Revenues from other applications decreased 1% year over year due to lower revenues from advanced and telecom applications.
Sales of high-power CW lasers were down 22% year over year due to lower demand in flat sheet cutting applications and reduced demand in welding applications due to the timing of projects.
Pulsed laser sales declined 25% year over year due to lower demand in marking and solar cell manufacturing applications.
Sales decreased 13% in North America and 28% in China on a year-over-year basis. However, sales increased 41% year over year in Japan and 3% in Europe.
IPG Photonics reported a gross margin of 44.1%, up 100 basis points on a year-over-year basis.
Balance Sheet
As of Sep 30, 2023, IPG Photonics had $1.10 billion in cash & cash equivalents compared with $1.10 billion as of Jun 30, 2023.
Guidance
For fourth-quarter 2023, IPG Photonics anticipates sales to be $270-$300 million. Earnings are projected between 80 cents per share and $1.10 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -11.67% due to these changes.
VGM Scores
Currently, IPG has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 indicates a downward shift. 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
