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Advanced Energy (AEIS) Q3 Earnings & Revenues Beat, Rise Y/Y
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Advanced Energy Industries, Inc. (AEIS - Free Report) reported third-quarter 2020 non-GAAP earnings of $1.66 per share, beating the Zacks Consensus Estimate by 41.9%. Further, the bottom line was higher than management’s guided range of 9 cents to $1.40 per share.
The bottom line also improvedsignificantly from 54 cents per share in the year-ago quarter. Additionally, the figure surged 40.7% sequentially.
Revenues of $389.5 million surpassed the Zacks Consensus Estimate of $352 million and came within management’s guided range of $325-$375 million. Moreover, the top line soared 122.4% from the year-ago quarter and 14.6% from the prior quarter.
The year-over-year improvement in the top line can be attributed to favourable demand conditions. Plus, a strong momentum across semiconductor equipment, data center, telecom and networking, and industrial and medical contributed to the outperformance. Additionally, a positive contribution from Artesyn Embedded Power buyout was a catalyst.
Further, a solid performance delivered by the company across North America and Asia was a major upside.
However, coronavirus-induced supply-chain constraints remained concerns.
Shares of Advanced Energy have returned 17.2% on a year-to-date basis, underperforming the industry’s rally of 32.6%.
Nevertheless, the company is optimistic about its power supplies for medical applications. Further, prospects related to 5G remain key levers. Additionally, the strengthening momentum across data center market is a tailwind.
All these factors are likely to help the stock rebound in the near term.
Top Line in Detail
Product revenues soared 141.8% year over year to $358.3 million (92% of total revenues) in the third quarter.
Services revenues improved15.8% from the prior-year quarter to $31.3 million (8% of revenues).
Product Line in Detail
Semiconductor Equipment revenues jumped 73.2% year over year to $167.1 million (43% of total revenues). The company witnessed heavy investments in foundry/logic, which acted as a boon. Also, hefty NAND memory investments contributed significantlyto the results. This apart, a solid momentum across semiconductor products and services substantially aided the performance.
Industrial & Medical revenues rose 57.7% year over year to $87 million (22.3% of revenues).
Telecom & Networking revenues were $47.7 million (12.2% of revenues), up from $10.02 million in the prior-year quarter.
Data CenterComputing revenues were $87.7 million (22.5% of revenues), up from $13.5 million in the year-ago quarter. Climbing hyperscale revenues and a strong momentum across Enterprise OEM owing to solid demand from prior design wins benefited the company.
Advanced Energy Industries, Inc. Price, Consensus and EPS Surprise
In the third quarter, non-GAAP gross profit was 39.8%, which contracted 380 basis points (bps) from the year-ago quarter.
Non-GAAP operating expenses were $78.9 million, up 47.6% year over year. As a percentage of revenues, the figure contracted significantly from 30.5% in the year-ago quarter to 20.3% in the reported quarter.
Further, non-GAAP operating margin was 19.5%, expanding 640 bps from the prior-year quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2020, cash, cash equivalents and marketable securities were $431.6 million compared with $383.4million as of Jun 30, 2020.
Long-term debt stood at $308.8 million at the end of the third quarter, down from $313.04million at the end of the second quarter.
During the third quarter, cash flow from operations was $67.5 million compared with $38.6 million in the second quarter.
Capital expenditure during the reported quarter was $11.8 million, up from $7.3 million in the prior quarter.
Q420 Guidance
For fourth-quarter 2020, Advanced Energy expects non-GAAP earnings between $1.10 and $1.50 per share. The Zacks Consensus Estimate is pegged at $1.10 per share.
Further, the company anticipates revenues in the range of $340-$380 million. The Zacks Consensus Estimate for the same is projected at $341.05 million.
Zacks Rank & Other Key Picks
Advanced Energy currently has a Zacks Rank #2 (Buy). Some other top-ranked stocks in the broader sector are NVIDIA (NVDA - Free Report) , Himax Technologies (HIMX - Free Report) and Covetrus . While NVIDIA sports a Zacks Rank #1 (Strong Buy), Himax and Covetrus carry a Zacks Rank of 2, presently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Covetrus is set to report results on Nov 10 while Himax and NVIDIA are scheduled to release earnings on Nov 12 and Nov 18, respectively.
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Advanced Energy (AEIS) Q3 Earnings & Revenues Beat, Rise Y/Y
Advanced Energy Industries, Inc. (AEIS - Free Report) reported third-quarter 2020 non-GAAP earnings of $1.66 per share, beating the Zacks Consensus Estimate by 41.9%. Further, the bottom line was higher than management’s guided range of 9 cents to $1.40 per share.
The bottom line also improvedsignificantly from 54 cents per share in the year-ago quarter. Additionally, the figure surged 40.7% sequentially.
Revenues of $389.5 million surpassed the Zacks Consensus Estimate of $352 million and came within management’s guided range of $325-$375 million. Moreover, the top line soared 122.4% from the year-ago quarter and 14.6% from the prior quarter.
The year-over-year improvement in the top line can be attributed to favourable demand conditions. Plus, a strong momentum across semiconductor equipment, data center, telecom and networking, and industrial and medical contributed to the outperformance. Additionally, a positive contribution from Artesyn Embedded Power buyout was a catalyst.
Further, a solid performance delivered by the company across North America and Asia was a major upside.
However, coronavirus-induced supply-chain constraints remained concerns.
Shares of Advanced Energy have returned 17.2% on a year-to-date basis, underperforming the industry’s rally of 32.6%.
Nevertheless, the company is optimistic about its power supplies for medical applications. Further, prospects related to 5G remain key levers. Additionally, the strengthening momentum across data center market is a tailwind.
All these factors are likely to help the stock rebound in the near term.
Top Line in Detail
Product revenues soared 141.8% year over year to $358.3 million (92% of total revenues) in the third quarter.
Services revenues improved15.8% from the prior-year quarter to $31.3 million (8% of revenues).
Product Line in Detail
Semiconductor Equipment revenues jumped 73.2% year over year to $167.1 million (43% of total revenues). The company witnessed heavy investments in foundry/logic, which acted as a boon. Also, hefty NAND memory investments contributed significantlyto the results. This apart, a solid momentum across semiconductor products and services substantially aided the performance.
Industrial & Medical revenues rose 57.7% year over year to $87 million (22.3% of revenues).
Telecom & Networking revenues were $47.7 million (12.2% of revenues), up from $10.02 million in the prior-year quarter.
Data CenterComputing revenues were $87.7 million (22.5% of revenues), up from $13.5 million in the year-ago quarter. Climbing hyperscale revenues and a strong momentum across Enterprise OEM owing to solid demand from prior design wins benefited the company.
Advanced Energy Industries, Inc. Price, Consensus and EPS Surprise
Advanced Energy Industries, Inc. price-consensus-eps-surprise-chart | Advanced Energy Industries, Inc. Quote
Operating Results
In the third quarter, non-GAAP gross profit was 39.8%, which contracted 380 basis points (bps) from the year-ago quarter.
Non-GAAP operating expenses were $78.9 million, up 47.6% year over year. As a percentage of revenues, the figure contracted significantly from 30.5% in the year-ago quarter to 20.3% in the reported quarter.
Further, non-GAAP operating margin was 19.5%, expanding 640 bps from the prior-year quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2020, cash, cash equivalents and marketable securities were $431.6 million compared with $383.4million as of Jun 30, 2020.
Long-term debt stood at $308.8 million at the end of the third quarter, down from $313.04million at the end of the second quarter.
During the third quarter, cash flow from operations was $67.5 million compared with $38.6 million in the second quarter.
Capital expenditure during the reported quarter was $11.8 million, up from $7.3 million in the prior quarter.
Q420 Guidance
For fourth-quarter 2020, Advanced Energy expects non-GAAP earnings between $1.10 and $1.50 per share. The Zacks Consensus Estimate is pegged at $1.10 per share.
Further, the company anticipates revenues in the range of $340-$380 million. The Zacks Consensus Estimate for the same is projected at $341.05 million.
Zacks Rank & Other Key Picks
Advanced Energy currently has a Zacks Rank #2 (Buy). Some other top-ranked stocks in the broader sector are NVIDIA (NVDA - Free Report) , Himax Technologies (HIMX - Free Report) and Covetrus . While NVIDIA sports a Zacks Rank #1 (Strong Buy), Himax and Covetrus carry a Zacks Rank of 2, presently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Covetrus is set to report results on Nov 10 while Himax and NVIDIA are scheduled to release earnings on Nov 12 and Nov 18, respectively.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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