Back to top

Image: Bigstock

Advanced Energy (AEIS) Up 15.4% Since Last Earnings Report: Can It Continue?

Read MoreHide Full Article

It has been about a month since the last earnings report for Advanced Energy Industries (AEIS - Free Report) . Shares have added about 15.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Advanced Energy due for a pullback? 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.

Advanced Energy Beats on Q3 Earnings & Revenues

Advanced Energy Industries reported third-quarter 2022 non-GAAP earnings of $2.12 per share, beating the Zacks Consensus Estimate by 53.6%. Further, the bottom line increased 138.2% and 47.2% from the year-ago quarter and the previous quarter’s levels, respectively.

Revenues of $516.3 million surpassed the Zacks Consensus Estimate of $444.4 million. The top line improved 49.2% and 17.1% year over year and sequentially, respectively.

Strong momentum across the semiconductor equipment, data center computing, telecom and networking, and industrial and medical end markets drove the top line.

End Market in Detail

Semiconductor Equipment: Revenues generated from the market grew 54% year over year to $266.6 million (51.6% of the total revenues), driven by the growing momentum across dielectric etch, conductor etch and RPS technologies.

Industrial & Medical: Revenues from the market grew 48% year over year to $119.6 million (23.2% of the total revenues) in the reported quarter. Top-line growth in the market was driven by growing design wins in surgical science and EV charging. Strengthening alliance with Tier-1 OEMs in the medical market was a positive.

Data Center Computing: Revenues from the market were $87.5 million (17% of the total revenues), up 41% from the year-ago quarter’s level.

Telecom & Networking: Revenues generated from the market were $42.5 million (8.2% of the total revenues), up 44% from the prior-year quarter’s level.

Operating Results

In the third quarter, GAAP’s gross profit was 37%, which expanded 230 basis points (bps) year over year. The non-GAAP gross profit margin was 37.5%, which expanded 140 bps from the year-ago quarter’s level.

Non-GAAP operating expenses were $99.8 million, up 19.3% year over year. As a percentage of revenues, the figure contracted 490 bps year over year to 19.3% in the reported quarter.

The non-GAAP operating margin was 18.1%, expanding 620 bps from the prior-year quarter’s level.

Balance Sheet & Cash Flow

As of Sep 30, 2022, cash and cash equivalents were $409.05 million compared with $372.7 million as of Jun 30, 2022.

Total debt was $378.1 million at the third-quarter end, down from $383 million at the second-quarter end.

For the third quarter, cash flow from operations was $65.4 million, which jumped from $37.6 million in the second quarter.

Advanced Energy made dividend payments of $3.8 million and repurchased shares worth $2.4 million in the quarter.

Guidance

For fourth-quarter 2022, Advanced Energy expects non-GAAP earnings of $1.55 per share (+/- 25 cents).

Advanced Energy anticipates revenues of $470 million (+/- $20 million).

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

At this time, Advanced Energy has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Advanced Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Advanced Energy belongs to the Zacks Semiconductor Equipment - Wafer Fabrication industry. Another stock from the same industry, Lam Research (LRCX - Free Report) , has gained 19.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.

Lam Research reported revenues of $5.07 billion in the last reported quarter, representing a year-over-year change of +17.9%. EPS of $10.42 for the same period compares with $8.36 a year ago.

For the current quarter, Lam Research is expected to post earnings of $9.93 per share, indicating a change of +16.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.2% over the last 30 days.

Lam Research has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Lam Research Corporation (LRCX) - free report >>

Advanced Energy Industries, Inc. (AEIS) - free report >>

Published in