A month has gone by since the last earnings report for Universal Display Corp. (
OLED Quick Quote OLED - Free Report) . Shares have added about 9.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Universal Display due for a pullback? 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 drivers.
Universal Display Beats Q1 Earnings Estimates, Revenues Falter
Universal Display reported mixed first-quarter 2023 results, with the top line missing the Zacks Consensus Estimate and the bottom line beating the same by a penny. Despite ongoing innovation initiatives, the company reported lower revenues year over year primarily driven by a decline in material sales stemming from weakness in the global economy.
Net income during the reported quarter was $39.8 million or 83 cents per share compared with $50 million or $1.05 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by a penny. The year over year decline was primarily induced by lower net sales in the quarter.
Total revenues declined to $130.5 million from $150.5 million in the prior-year quarter. Uncertainty in the global economy and decline in material sales led to year over year revenue contraction. The top line missed the Zacks Consensus Estimate of $136 million.
Material sales revenue stood at $70.2 million, down from $86.7 million a year ago. Green emitter sales were $54 million down from $66 million, while red emitter sales declined to $16 million from $20 million. The royalty and license fees generated revenues of $55.2 million compared with $59.8 million in the prior-year quarter due to lower unit material volume. The contract research services generated revenues of $5.1 million, up from $4 million in the prior-year quarter. Other Details
Gross profit in the first quarter was $97.5 million compared with $117.3 million in the prior-year period with respective margins of 75% and 78%. Underutilization in the Shannon facility and an increase in inventory provision led to the decline. Operating income was $45.4 million compared with $62.3 million in the prior-year quarter, with an operating margin of 35% and 41%, respectively.
Cash Flow & Liquidity
In the quarter, Universal Display generated $47.6 million from operating activities compared with $52.6 million in the prior-year period. As of Mar 31, 2023, the company had $158.3 million in cash and cash equivalents and $60.2 in retirement plan benefit liability.
For 2023, management expects revenues to be in the range of $550-$600 million. Despite macroeconomic challenges, management expects increase in OLED adoption and healthy growth in the coming years driven by the company’s ongoing investment in innovation and infrastructure development.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -6.85% due to these changes.
Currently, Universal Display has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Universal Display 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
Universal Display is part of the Zacks Electronics - Miscellaneous Components industry. Over the past month, TE Connectivity (
TEL Quick Quote TEL - Free Report) , a stock from the same industry, has gained 2.7%. The company reported its results for the quarter ended March 2023 more than a month ago.
TE Connectivity reported revenues of $4.16 billion in the last reported quarter, representing a year-over-year change of +3.8%. EPS of $1.65 for the same period compares with $1.81 a year ago.
TE Connectivity is expected to post earnings of $1.66 per share for the current quarter, representing a year-over-year change of -10.8%. Over the last 30 days, the Zacks Consensus Estimate has changed 0%.
TE Connectivity has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.