It has been about a month since the last earnings report for Advanced Energy Industries (AEIS Quick QuoteAEIS - Free Report) . Shares have added about 16.1% 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 Q1 Earnings & Revenues

Advanced Energy Industries reported first-quarter 2023 non-GAAP earnings of $1.24 per share, beating the Zacks Consensus Estimate by 10.7%. The bottom line remained flat on a year-over-year basis.

Revenues of $425.04 million surpassed the Zacks Consensus Estimate of $411.13 million. The top line improved 7% year over year.

Strong momentum across the Industrial and Medical and Telecom and Networking end markets drove top-line growth in the reported quarter.

However, softness across Semiconductor Equipment and Data Center Computing markets was a concern.

End Market in Detail

Semiconductor Equipment: Revenues generated from the market fell 4% year over year to $194.21 million (45.7% of the total revenues).

Nevertheless, solid demand for high voltage and growing design wins in etch and deposition were positives.

Industrial & Medical: Revenues from the market grew 48% year over year to $123.02 million (29% of the total revenues) in the reported quarter. Top-line growth in the market was driven by growing design wins in industrial and medical applications. Also, strong demand for thin film was a tailwind.

Data Center Computing: Revenues from the market were $59.7 million (14% of the total revenues), down 22% from the year-ago quarter’s level. Component shortage and weakening momentum among hyper-scale customers were concerns.

Telecom & Networking: Revenues generated from the market were $48.15 million (11.3% of the total revenues), up 36% from the prior-year quarter’s level.

Operating Results

In the first quarter, GAAP gross margin was 36.5%, which expanded 20 basis points (bps) year over year. The non-GAAP gross margin was 36.8%, expanding 20 bps from the year-ago quarter’s level.

Non-GAAP operating expenses were $99.7 million, up 13.8% year over year. As a percentage of revenues, the figure expanded 147 bps year over year to 23.5% in the reported quarter.

The non-GAAP operating margin was 13.4%, contracting 110 bps from the prior-year quarter’s level.

Balance Sheet & Cash Flow

As of Mar 31, 2023, cash and cash equivalents were $461.7 million compared with $458.82 million as of Dec 31, 2022.

Total debt was $368.4 million at the first-quarter end, down from $373.3 million at the fourth-quarter end.

For the first quarter, cash flow from operations was $31.9 million, which dropped from $70.7 million in the fourth quarter.

Advanced Energy made dividend payments of $3.8 million in the reported quarter.

Guidance

For second-quarter 2023, Advanced Energy expects non-GAAP earnings of $1.00 per share (+/- 25 cents).

Advanced Energy anticipates revenues of $410 million (+/- $20 million).

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted -6.85% due to these changes.

VGM Scores

Currently, Advanced Energy has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. 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.

Performance of an Industry Player

Advanced Energy is part of the Zacks Semiconductor Equipment - Wafer Fabrication industry. Over the past month, Lam Research (LRCX Quick QuoteLRCX - Free Report) , a stock from the same industry, has gained 21%. The company reported its results for the quarter ended March 2023 more than a month ago.

Lam Research reported revenues of $3.87 billion in the last reported quarter, representing a year-over-year change of -4.7%. EPS of $6.99 for the same period compares with $7.40 a year ago.

Lam Research is expected to post earnings of $5.03 per share for the current quarter, representing a year-over-year change of -43%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.5%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Lam Research. Also, the stock has a VGM Score of C.