A month has gone by since the last earnings report for IPG Photonics (IPGP Quick QuoteIPGP - Free Report) . Shares have lost about 6.8% 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 its most recent earnings report in order to get a better handle on the important catalysts.

IPG Photonics Q1 Earnings Beat, Revenues Improve Y/Y

IPG Photonics reported first-quarter 2022 earnings of $1.31 per share, which beat the Zacks Consensus Estimate by 32.32% and improved 4% year over year.

Revenues of $370 million increased 7% on a year-over-year basis and surpassed the consensus mark by 10.94%.

The company noted that the results were driven by growth in demand in EV battery manufacturing, handheld welding and medical applications. The company’s book-to-bill ratio was greater than 1 in the reported quarter.

Quarterly Details

Materials processing (92% of total revenues) increased 7% year over year. The upside can be attributed to higher demand for welding, marking and 3D printing. However, sales were partially offset by lower revenues in cutting and solar cell manufacturing process.

Revenues from other applications increased 9% year over year due to higher sales in medical. However, it was offset by weaker sales in advanced applications and telecom.

Sales of high-power CW lasers were down 2% year over year due to softer demand in China. Pulsed and medium-power lasers’ revenues increased, driven by growth in emerging products and applications.

Sales surged 27% in Europe, 5% in North America and 18% in Japan on a year-over-year basis. Meanwhile, the same declined 7% in China.

IPG Photonics reported a gross margin of 46.4%, which decreased 100 basis points (bps) on a year-over-year basis.

Operating margin came in at 25.2%, decreasing by 50 bps from the year-ago quarter.

Balance Sheet & Cash Flow

As of Mar 31, 2022, IPG Photonics had $642.5 million in cash & cash equivalents compared with $709 million as of Dec 31, 2021. Short-term investments as of Mar 31, 2022 were of $774.2 million compared with $805.4 million as of Dec 31, 2021.

As of Mar 31, 2022, total debt (including the current portion) was nearly $33.2 million compared with $34 million as of Dec 31, 2021.

Cash flow from operations was $16 million in the first quarter compared with fourth-quarter 2021’s figure of $85 million.

Guidance

For second-quarter 2022, IPG Photonics anticipates sales to be $355-$385 million. Earnings are projected between 95 cents per share and $1.25 per share.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted 12.56% due to these changes.

VGM Scores

At this time, IPG has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, IPG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.