It has been about a month since the last earnings report for MKS Instruments, Inc. (MKSI - Free Report) . Shares have added about 8.5% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is MKSI 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 catalysts.
MKS Instruments reported first-quarter 2018 adjusted earnings of $2.07 per share, which beat the Zacks Consensus Estimate of $1.99 and increased 63% year over year.
Revenues of $554.3 million surpassed the Zacks Consensus Estimate of $531 million and came in 26.8% higher than the prior-year figure.
Products revenues (89.6% of total revenues) during the quarter came in at $496.7 million, up 28% from the year-ago quarter. Services revenues (10.4%) increased 17.1% year over year to $57.6 million.
Sales to semiconductor customers increased 26% year over year to $313 million. Sales to advanced markets were $241 million, up 28% from the year-ago quarter.
The company’s Vacuum and Analysis segment reported sales of $348 million, an increase of 25% year over year. Sales from the Light and Motion Division were $206 million, up 29% from the prior-year period.
The company’s gross profit margin for the quarter came in at 47.4%, expanding 40 basis points (bps) year over year.
Research & development and sales, general & administrative expenses as a percentage of revenues declined 130 bps and 200 bps, respectively. This was partially offset by higher restructuring charges and environmental costs.
The company reported non-GAAP operating income of $145.05 million in the quarter, up 47.3% from the year-ago quarter.
Adjusted operating margin in the reported quarter was 26.2%, which expanded 370 bps on a year-over-year basis.
Balance Sheet and Cash Flow
MKS Instruments exited the quarter with cash and cash equivalents of $340.89 compared with $333.89 million as of Dec 31, 2017.
Long-term debt was $341.3 million, down from $390 million as of Dec 31, 2017.
As of Mar 31, 2018, cash from operating activities was $72.77 million compared with $66.06 million in the previous quarter.
MKS Instruments anticipates to report revenues within $550-$590 million and earnings within $2.09-$2.36 for second-quarter 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter.
At this time, MKSI has a strong Growth Score of A, a grade with the same score on the momentum front. The stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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 and momentum investors than value investors.
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise MKSI has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.