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Why Is MKS Instruments (MKSI) Down 2.4% Since the Last Earnings Report?
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A month has gone by since the last earnings report for MKS Instruments, Inc. (MKSI - Free Report) . Shares have lost about 2.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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 drivers.
Fourth-Quarter 2016 Highlights
MKS Instruments reported better-than-expected results for fourth-quarter 2016.
The company’s adjusted earnings of $1.05 per share surpassed the Zacks Consensus Estimate of $1.00 by 5%. Also, the bottom line surged 208.8% from the year-ago tally of $0.34 per share.
For 2016, the company’s adjusted earnings were $3.03 per share, above the Zacks Consensus Estimate of $2.92 and up 36.5% from $2.22 recorded in 2015.
Revenues: In the quarter, MKS Instruments generated net revenue of $405 million, above the Zacks Consensus Estimate of $395.9 million. Also, the top line grew an impressive 135.5% year over year on the back of 151.1% increase in Products revenues and 55.9% growth in Services revenues.
For 2016, the company’s net revenue totaled $1,295 million, in line with the Zacks Consensus Estimate. However, revenues jumped 59.1% year over year.
Margins/Costs: In the quarter, MKS Instruments’ cost of sales soared 122.6% year over year, representing 54.7% of net revenue, up from 57.8% in the year-ago quarter. Gross margin expanded 310 basis points (bps) year over year to 45.3%.
Selling, general and administrative expenses, as a percentage of revenues, contracted 160 bps year over year to 16.7%, while research and development was at 8.1% versus 9.8% in the year-ago quarter. Adjusted operating margin in the quarter was 20.6%, up from 14.4% in the year-earlier quarter.
Balance Sheet: Exiting the fourth quarter, MKS Instruments had cash and cash equivalents of $228.6 million, down from $366.9 million recorded in the preceding quarter. Long-term debt was at $601.2 million, down 5.9% sequentially.
During the quarter, the company paid quarterly dividends of $9.1 million.
Outlook: MKS Instruments anticipates benefiting from the integration of its acquired assets of Newport Corporation (completed in Apr 2016). From this buyout, the company realized annualized synergistic benefit of approximately $20 million, exiting 2016. It foresees total synergies to be roughly $40 million, revised up from the earlier prediction of $35 million by 2018 end. In addition, the company aims at reducing its debt levels and slashing its interest costs.
For first-quarter 2017, MKS Instruments projects sales to range within $385−$$425 million and adjusted earnings within $0.93–$1.17 per share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter. In the past month, the consensus estimate shifted by 13.55% due to these changes.
At this time, MKS Instruments' stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'C'. Following the exact same course, the stock was allocated also 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 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also look promising. It comes with little surprise the stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.
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Why Is MKS Instruments (MKSI) Down 2.4% Since the Last Earnings Report?
A month has gone by since the last earnings report for MKS Instruments, Inc. (MKSI - Free Report) . Shares have lost about 2.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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 drivers.
Fourth-Quarter 2016 Highlights
MKS Instruments reported better-than-expected results for fourth-quarter 2016.
The company’s adjusted earnings of $1.05 per share surpassed the Zacks Consensus Estimate of $1.00 by 5%. Also, the bottom line surged 208.8% from the year-ago tally of $0.34 per share.
For 2016, the company’s adjusted earnings were $3.03 per share, above the Zacks Consensus Estimate of $2.92 and up 36.5% from $2.22 recorded in 2015.
Revenues: In the quarter, MKS Instruments generated net revenue of $405 million, above the Zacks Consensus Estimate of $395.9 million. Also, the top line grew an impressive 135.5% year over year on the back of 151.1% increase in Products revenues and 55.9% growth in Services revenues.
For 2016, the company’s net revenue totaled $1,295 million, in line with the Zacks Consensus Estimate. However, revenues jumped 59.1% year over year.
Margins/Costs: In the quarter, MKS Instruments’ cost of sales soared 122.6% year over year, representing 54.7% of net revenue, up from 57.8% in the year-ago quarter. Gross margin expanded 310 basis points (bps) year over year to 45.3%.
Selling, general and administrative expenses, as a percentage of revenues, contracted 160 bps year over year to 16.7%, while research and development was at 8.1% versus 9.8% in the year-ago quarter. Adjusted operating margin in the quarter was 20.6%, up from 14.4% in the year-earlier quarter.
Balance Sheet: Exiting the fourth quarter, MKS Instruments had cash and cash equivalents of $228.6 million, down from $366.9 million recorded in the preceding quarter. Long-term debt was at $601.2 million, down 5.9% sequentially.
During the quarter, the company paid quarterly dividends of $9.1 million.
Outlook: MKS Instruments anticipates benefiting from the integration of its acquired assets of Newport Corporation (completed in Apr 2016). From this buyout, the company realized annualized synergistic benefit of approximately $20 million, exiting 2016. It foresees total synergies to be roughly $40 million, revised up from the earlier prediction of $35 million by 2018 end. In addition, the company aims at reducing its debt levels and slashing its interest costs.
For first-quarter 2017, MKS Instruments projects sales to range within $385−$$425 million and adjusted earnings within $0.93–$1.17 per share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter. In the past month, the consensus estimate shifted by 13.55% due to these changes.
MKS Instruments, Inc. Price and Consensus
MKS Instruments, Inc. Price and Consensus | MKS Instruments, Inc. Quote
VGM Scores
At this time, MKS Instruments' stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'C'. Following the exact same course, the stock was allocated also 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 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also look promising. It comes with little surprise the stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.