Why Is IPG (IPGP) Down 3.2% Since Last Earnings Report?
A month has gone by since the last earnings report for IPG Photonics (IPGP). Shares have lost about 3.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.
IPG Photonics' Q2 Earnings Beat, Revenues Decrease Y/Y
IPG Photonics reported second-quarter 2023 earnings of $1.31 per share, beating the Zacks Consensus Estimate by 5.65%.
Revenues of $340 million decreased 9.8% on a year-over-year basis and lagged the consensus mark by 1.04%. Emerging growth product sales accounted for 41% of revenues.
Unfavorable forex hurt revenue growth by 2%, whereas business divestitures reduced it by roughly 1%.
Quarterly Details
Materials processing (92% of total revenues) decreased 10% year over year. The downside can be attributed to lower revenues from cutting and marking applications.
Revenues from other applications decreased 23% year over year due to lower revenues from advanced applications and medical.
Sales of high-power CW lasers were down 10% year over year due to lower demand in flat sheet cutting applications. Pulsed laser sales declined 24% year over year due to lower demand in foil cutting and marking applications.
Sales decreased 11% in North America and 28% in China, on a year-over-year basis. However, sales increased 14% year over year in Japan and 4% in Europe.
IPG Photonics reported a gross margin of 43.4%, down 230 basis points on a year-over-year basis.
Balance Sheet
As of Jun 30, 2023, IPG Photonics had $1.10 billion in cash & cash equivalents compared with $1.07 billion as of Mar 31, 2023.
Guidance
For third-quarter 2023, IPG Photonics anticipates sales to be $300-$330 million. Earnings are projected between 85 cents per share and $1.15 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 -21.24% due to these changes.
VGM Scores
At this time, IPG has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise IPG has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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IPG Photonics Corporation (IPGP) : Free Stock Analysis Report
