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Advanced Energy (AEIS) to Report Q4 Earnings: What to Expect?

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Advanced Energy Industries, Inc. (AEIS - Free Report) is scheduled to report fourth-quarter 2019 results on Feb 18, 2020.

For fourth-quarter 2019, the company expects revenues in the range of $295-$325 million. The Zacks Consensus Estimate for revenues is currently pegged at $312.5 million, suggesting growth of 102.7% from the year-ago quarter.

In the third-quarter earnings conference, management announced that it anticipated strengthening momentum in semiconductor equipment space; pickup in demand for industrial and medical applications; and ongoing momentum in data center computing to drive the fourth-quarter the top line.

Advanced Energy expects non-GAAP earnings in the band of 56-80 cents. The Zacks Consensus Estimate for earnings is pegged at 70 cents per share, unchanged over the past 30 days. The figure indicates a decline of 4.1% from the prior-year reported figure.

Notably, the company has surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters, missing the same once. It has a trailing four-quarter positive surprise of 22.85%, on average.

Advanced Energy reported third-quarter 2019 non-GAAP earnings of 54 cents per share, beating the Zacks Consensus Estimate by 45.9%. Revenues of $175.1 million surpassed the Zacks Consensus Estimate of $154.7 million.

Factors Likely to Have Influenced Q4 Results

Advanced Energy’s fourth-quarter results are expected to have benefited from robust adoption of power subsystems and process-control technologies across semiconductor, and medical imaging and diagnostic verticals.
 

In fact, during the fourth quarter, the company announced adoption of its power supplies by Grenzebach Group’s advanced architectural glass coating lab in Hamlar, Germany. The new architectural glass coating machine effectively utilizes some of Advanced Energy’s most robust technologies like advanced pulsed DC Solution and Ascent DMS among others. Incremental adoption of the company’s power supplies in energy vertical is expected to have driven the fourth-quarter performance.

Growing design wins across hyperscale and enterprise customers and solid momentum across 5G platforms at infrastructure equipment suppliers is expected to get reflected in the fourth-quarter top line.

Moreover, the company is well poised to gain from acquisition of Artesyn Embedded Technologies’ Embedded Power business, which has been accretive to both earnings and revenues in the third quarter. Notably, Artesyn Embedded Power buyout contributed $41 million in revenues and 7 cents per share to the bottom line in the third quarter.

Further, Advanced Energy has forayed into two new growth markets – data center computing, and telecom and networking on the back of Artesyn Embedded Power acquisition. Accelerated deployment of 5G is likely to have been a tailwind, in this regard.

Noteworthy Developments in Q4

During the quarter under review, Advanced Energy rolled out PowerInsight analytics solution to enhance power delivery systems. By utilizing PowerInsight, industrial manufacturing and services customers can transform the data from power delivery systems to deliver useful business insights driven by advanced analytics. These capabilities aid customers to improve performance cost efficiently and advance production yield in manufacturing processes.

The company is also leaving no stone unturned to gain from investments in research and development. In fact, the company announced the opening of Advanced Materials Processing (AMP) Showcase Lab in Germany.

Although the investments hold promise in the long-term, Advanced Energy’s increasing expenses on product development, and facilities, to maintain competitive position in the wafer-fabrication market, is likely to have limited margin expansion in the fourth quarter.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Advanced Energy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Although Advanced Energy has a Zacks Rank #2, an Earnings ESP of 0.00% makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few stocks that you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Alarm.com Holdings, Inc. (ALRM - Free Report) has an Earnings ESP of +1.15% and a Zacks Rank #2.

Cable One, Inc. (CABO - Free Report) has an Earnings ESP of +3.89% and a Zacks Rank of 2.

CyrusOne Inc (CONE - Free Report) has an Earnings ESP of +0.06% and a Zacks Rank of 2.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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