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Bull Of The Day: AXT Inc (AXTI)

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AXT Inc (AXTI - Free Report) is a Zacks Rank #1 (Strong Buy) and has that growth divergence that I love to see.  That means it has an A for Growth and a D for Value – telling me right away that this stock is what growth investors are looking for. That isn't the only reason that is is the Bull of the Day... let's take a look at the other reasons why this stock is headed higher.

I have seen a lot of chip related names post some good quarters of late and AXT was one of them.

Earnings History

The company reported a loss of a penny when a loss of a nickel was expected.  That four cent beat translates into a positive earnings surprise of 80%.

Prior to that I see two consecutive beats of the Zacks Consensus Estimate and one meet.  Over the course of the last four reports, the average positive earnings surprise is 35%.

Estimate Revisions

Lately we have seen stocks that have earnings estimates that just hold still become Zacks Rank #2 (Buy) where they would normally be Zacks Rank #3 (Hold). AXTI is seeing earnings estimates move higher, so it is a well deserved Zacks Rank #1 (Strong Buy). 

I see this quarter increasing by a penny and the full year numbers running from a loss of three cents to a gain of three cents.  That is a huge move!

The 2021 numbers are holding still at $0.21, so there is some huge earnings growth expected.

Valuation

This is the hard part… the forward PE doesn’t reach the 2021 numbers yet, so it is skewed a bit and shows 189x forward earnings.  If we use the $0.21 number as the “E” in PE, the multiple shrinks to 26x. I see a price to book of 1.1x and that is something that the true value players most love to see.  A price to sales multiple of 2.55x is also somewhat low for a chip stock.

At the end of the day, chip names have been very strong of late… if we are to see the resurrection of animal spirits on Wall Street, these will be among the fist stocks they run to grab.

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AXT Inc Price, Consensus and EPS Surprise

AXT Inc Price, Consensus and EPS Surprise

AXT Inc price-consensus-eps-surprise-chart | AXT Inc Quote

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