It has been about a month since the last earnings report for Advanced Energy Industries (AEIS Quick QuoteAEIS - Free Report) . Shares have lost about 7.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Advanced Energy 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.

Advanced Energy Beats on Q2 Earnings & Revenues

Advanced Energy Industries reported second-quarter 2022 non-GAAP earnings of $1.44 per share, beating the Zacks Consensus Estimate by 26.3%. Further, the bottom line increased 15.2% from the year-ago quarter.

Revenues of $440.9 million surpassed the Zacks Consensus Estimate of $402 million. The top line improved 22% from the year-ago quarter.

Strong momentum across semiconductor equipment, telecom and networking, and industrial and medical end markets drove top-line growth.

End Market in Detail

Semiconductor Equipment: Revenues generated from the market grew 30% year over year to $228.8 million (51.9% of the total revenues), driven by the growing momentum across dielectric etch and RPS. Also, strong design wins, with high-voltage solutions, were positives.

Industrial & Medical: Revenues from the market grew 26% year over year to $104.9 million (23.8% of the total revenues) in the reported quarter. Top-line growth in the market was driven by growing design wins in medical, indoor farm lighting, factory automation and industrial printing.

Data Center Computing: Revenues from the market were $69.2 million (15.7% of the total revenues), down 0.4% from the year-ago quarter.

Telecom & Networking: Revenues generated from the market were $38.04 million (8.6% of the total revenues), up 19% from the prior-year quarter.

Operating Results

In the second quarter, the non-GAAP gross profit margin was 37.1%, which contracted 90 basis points (bps) from the year-ago quarter.

Non-GAAP operating expenses were $94.2 million, up 14.1% year over year. As a percentage of revenues, the figure contracted 150 bps year over year to 21.4% in the reported quarter.

The non-GAAP operating margin was 15.8%, contracting 70 bps from the prior-year quarter.

Balance Sheet & Cash Flow

As of Jun 30, 2022, cash and cash equivalents were $372.7 million compared with $521.2 million as of Mar 31, 2022.

Total debt was $383 million at the second-quarter end, down from $387.9 million at the first-quarter end.

For the second quarter, cash flow from operations was $37.6 million, which jumped from $9.9 million in the first quarter.

The company made dividend payments of $3.8 million and repurchased shares worth $17 million in the quarter.

Guidance

For third-quarter 2022, Advanced Energy expects non-GAAP earnings of $1.30 per share (+/- 30 cents).

The company anticipates revenues of $435 million (+/- $25 million).

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -5.74% due to these changes.

VGM Scores

Currently, Advanced Energy has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. 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, Advanced Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.