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IPG (IPGP) Up 3.6% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for IPG Photonics (IPGP - Free Report) . Shares have added about 3.6% in that time frame, underperforming 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 catalysts.
IPG Photonics reported third-quarter 2022 earnings of $1.47 per share, which beat the Zacks Consensus Estimate by 25.64% and increased 5% year over year.
Revenues of $349 million decreased 8% on a year-over-year basis and missed the consensus mark by 3.40%.
The company noted that forex challenges primarily due to the U.S. dollar reduced revenues by approximately $26 million or 7% from the year-ago period.
Quarterly Details
Materials processing (90% of total revenues) decreased 10% year over year. The downside was due to lower revenues in cutting applications in China and Europe. However, the company is experiencing rising demand for welding and cleaning and solar cell applications.
Revenues from other applications increased 10% year over year due to higher sales in medical. However, sales of high-power CW lasers were down 14% year over year due to softer demand for high-cutting applications.
Sales rose 1% in North America but decreased 21% in Japan, 13% in Europe and 14% in China year over year.
IPG Photonics reported a gross margin of 43.1%, which decreased 590 basis points (bps) on a year-over-year basis. The decrease was on account of higher inventory reserves, shipping costs and tariffs, and lower manufacturing cost absorption, which was partially offset by the lower cost of products sold.
Operating margin came in at 26.7%, decreasing 20 bps from the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2022, IPG Photonics had $869.27 million in cash & cash equivalents compared with $771.89 million as of Jun 30, 2022. Short-term investments as of Sep 30, 2022, were $365.41 million compared with $462.86 million as of Jun 30, 2022.
As of Sep 30, 2022, the current portion of long-term debt was nearly $16.39 million compared with $32.2 million as of Jun 30, 2022.
Cash flow from operations was $171.02 million in the third quarter compared with the second-quarter 2022 figure of $95.16 million.
Guidance
For fourth-quarter 2022, IPG Photonics anticipates sales to be $300-$330 million. Earnings are projected between 70 cents and $1 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 -13.18% due to these changes.
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. Charting a somewhat similar path, 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 C. 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 (IPGP) Up 3.6% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for IPG Photonics (IPGP - Free Report) . Shares have added about 3.6% in that time frame, underperforming 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 catalysts.
IPG Photonics Q3 Earnings Beat, Revenues Decline Y/Y
IPG Photonics reported third-quarter 2022 earnings of $1.47 per share, which beat the Zacks Consensus Estimate by 25.64% and increased 5% year over year.
Revenues of $349 million decreased 8% on a year-over-year basis and missed the consensus mark by 3.40%.
The company noted that forex challenges primarily due to the U.S. dollar reduced revenues by approximately $26 million or 7% from the year-ago period.
Quarterly Details
Materials processing (90% of total revenues) decreased 10% year over year. The downside was due to lower revenues in cutting applications in China and Europe. However, the company is experiencing rising demand for welding and cleaning and solar cell applications.
Revenues from other applications increased 10% year over year due to higher sales in medical. However, sales of high-power CW lasers were down 14% year over year due to softer demand for high-cutting applications.
Sales rose 1% in North America but decreased 21% in Japan, 13% in Europe and 14% in China year over year.
IPG Photonics reported a gross margin of 43.1%, which decreased 590 basis points (bps) on a year-over-year basis. The decrease was on account of higher inventory reserves, shipping costs and tariffs, and lower manufacturing cost absorption, which was partially offset by the lower cost of products sold.
Operating margin came in at 26.7%, decreasing 20 bps from the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2022, IPG Photonics had $869.27 million in cash & cash equivalents compared with $771.89 million as of Jun 30, 2022. Short-term investments as of Sep 30, 2022, were $365.41 million compared with $462.86 million as of Jun 30, 2022.
As of Sep 30, 2022, the current portion of long-term debt was nearly $16.39 million compared with $32.2 million as of Jun 30, 2022.
Cash flow from operations was $171.02 million in the third quarter compared with the second-quarter 2022 figure of $95.16 million.
Guidance
For fourth-quarter 2022, IPG Photonics anticipates sales to be $300-$330 million. Earnings are projected between 70 cents and $1 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 -13.18% due to these changes.
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. Charting a somewhat similar path, 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 C. 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.