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Advanced Energy (AEIS) Up 18.4% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Advanced Energy Industries (AEIS - Free Report) . Shares have added about 18.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is 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 its most recent earnings report in order to get a better handle on the important drivers.
Advanced Energy Beats on Q1 Earnings & Revenues
Advanced Energy Industries reported first-quarter 2020 non-GAAP earnings of 91 cents per share, beating the Zacks Consensus Estimate by 42.2%. Further, the figure was higher than mid-point of management’s guided range.
Further, the bottom line improved 56.9% on a year-over-year basis and 4.6% sequentially.
Revenues of $315.5 million surpassed the Zacks Consensus Estimate of $310 million and came within management’s guided range of $280-$340 million. Notably, the top line soared 124.1% from the year-ago quarter but declined 6.7% from the prior quarter.
The year-over-year improvement in the top line can be attributed to strength across semiconductor equipment, data center and, industrial and medical. Additionally, positive contributions from Artesyn Embedded Power buyout were tailwinds. Further, solid demand for the company’s power supplies serving medical applications, owing to growing need for diagnostic and respiratory equipments in the coronavirus pandemic, contributed to the results.
However, the company bore the brunt of coronavirus-induced government restrictions, which impacted the operations of its production facilities during the reported quarter.
The company continues to expect COVID-19 led government restriction to impact the top line negatively in the near term. Also, coronavirus induced supply chain constraints remain concerns.
Nevertheless, the company remains optimistic regarding its power supplies for medical applications. Further, growth prospects related to 5G remain positives. Additionally, the company’s Chinese factories have started running at full capacity, which remains noteworthy.
All these are likely to help the stock rebound in the near term.
Top-Line in Detail
Product revenues soared 158.1% year over year to $289.4 million (91.7% of total revenues) in the first quarter.
Services revenues declined 8.8% from the prior-year quarter to $26.1 million (8.3% of revenues). This was primarily due to sluggish semiconductor service business.
Product Line in Detail
Semiconductor Equipment revenues improved 46.1% year over year to $133.6 million (42.4% of total revenues). The company witnessed growing investments in foundry/logic, which remained a tailwind. Also, strong memory investments contributed to the results. Additionally, growing momentum across RF and RPS remained positive.
However, COVID-19 induced capacity constraints in the company’s service centres were headwinds.
Industrial & Medical revenues improved 25.7% year over year to $61.9 million (19.6% of revenues). This can be attributed to increasing demand in medical and life science space.
However, COVID-19 impacted the shipment of certain products during the reported quarter.
Telecom & Networking revenues were $33.7 million (10.7% of revenues), which decreased from $12.5 million in the prior quarter. The company witnessed sluggish investments by telecom carriers, which hurt the OEM demand.
Data Center Computing revenues were $86.2 million (27.3% of revenues), up significantly 10.6% from the previous quarter. Strengthening momentum across hyperscale customers benefited the company. Also, strong design wins contributed to the results.
Operating Results
In first quarter, non-GAAP gross profit was 37.8%, which contracted 920 basis points (bps) from the year-ago quarter.
Non-GAAP operating expenses came in $74.7 million, up 63.3% year over year.
Further, non-GAAP operating margin was 14.1%, contracting 40 bps from the prior-year quarter.
Balance Sheet & Cash Flow
As of Mar 31, 2019, cash, cash equivalents and Marketable securities were $355.03 million compared with $349.1 million Dec 31, 2019.
Long-term debt stood at $317.3 million at the end of first quarter, down from $321.5 million at the end of fourth quarter.
During the first quarter, cash flow from operations was $28.5 million compared with $19 million in the fourth quarter.
Capital expenditure during the reported quarter stood at $6.1 million, down from $9.5 million in the prior quarter.
Guidance
For second-quarter 2020, Advanced Energy expects non-GAAP earnings between 50 cents and $1.10 per share.
Revenues are anticipated in the range of $285-$345 million.
The company expects strong momentum across semiconductor equipment market and data center space.
However, industrial and telecom markets are expected to be sluggish in the near term. Further, COVID-19 related headwinds are major concerns.
How Have Estimates Been Moving Since Then?
Estimates revision followed an upward path over the past two months. The consensus estimate has shifted 34.36% due to these changes.
VGM Scores
Currently, Advanced Energy has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Advanced Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Advanced Energy (AEIS) Up 18.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Advanced Energy Industries (AEIS - Free Report) . Shares have added about 18.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is 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 its most recent earnings report in order to get a better handle on the important drivers.
Advanced Energy Beats on Q1 Earnings & Revenues
Advanced Energy Industries reported first-quarter 2020 non-GAAP earnings of 91 cents per share, beating the Zacks Consensus Estimate by 42.2%. Further, the figure was higher than mid-point of management’s guided range.
Further, the bottom line improved 56.9% on a year-over-year basis and 4.6% sequentially.
Revenues of $315.5 million surpassed the Zacks Consensus Estimate of $310 million and came within management’s guided range of $280-$340 million. Notably, the top line soared 124.1% from the year-ago quarter but declined 6.7% from the prior quarter.
The year-over-year improvement in the top line can be attributed to strength across semiconductor equipment, data center and, industrial and medical. Additionally, positive contributions from Artesyn Embedded Power buyout were tailwinds. Further, solid demand for the company’s power supplies serving medical applications, owing to growing need for diagnostic and respiratory equipments in the coronavirus pandemic, contributed to the results.
However, the company bore the brunt of coronavirus-induced government restrictions, which impacted the operations of its production facilities during the reported quarter.
The company continues to expect COVID-19 led government restriction to impact the top line negatively in the near term. Also, coronavirus induced supply chain constraints remain concerns.
Nevertheless, the company remains optimistic regarding its power supplies for medical applications. Further, growth prospects related to 5G remain positives. Additionally, the company’s Chinese factories have started running at full capacity, which remains noteworthy.
All these are likely to help the stock rebound in the near term.
Top-Line in Detail
Product revenues soared 158.1% year over year to $289.4 million (91.7% of total revenues) in the first quarter.
Services revenues declined 8.8% from the prior-year quarter to $26.1 million (8.3% of revenues). This was primarily due to sluggish semiconductor service business.
Product Line in Detail
Semiconductor Equipment revenues improved 46.1% year over year to $133.6 million (42.4% of total revenues). The company witnessed growing investments in foundry/logic, which remained a tailwind. Also, strong memory investments contributed to the results. Additionally, growing momentum across RF and RPS remained positive.
However, COVID-19 induced capacity constraints in the company’s service centres were headwinds.
Industrial & Medical revenues improved 25.7% year over year to $61.9 million (19.6% of revenues). This can be attributed to increasing demand in medical and life science space.
However, COVID-19 impacted the shipment of certain products during the reported quarter.
Telecom & Networking revenues were $33.7 million (10.7% of revenues), which decreased from $12.5 million in the prior quarter. The company witnessed sluggish investments by telecom carriers, which hurt the OEM demand.
Data Center Computing revenues were $86.2 million (27.3% of revenues), up significantly 10.6% from the previous quarter. Strengthening momentum across hyperscale customers benefited the company. Also, strong design wins contributed to the results.
Operating Results
In first quarter, non-GAAP gross profit was 37.8%, which contracted 920 basis points (bps) from the year-ago quarter.
Non-GAAP operating expenses came in $74.7 million, up 63.3% year over year.
Further, non-GAAP operating margin was 14.1%, contracting 40 bps from the prior-year quarter.
Balance Sheet & Cash Flow
As of Mar 31, 2019, cash, cash equivalents and Marketable securities were $355.03 million compared with $349.1 million Dec 31, 2019.
Long-term debt stood at $317.3 million at the end of first quarter, down from $321.5 million at the end of fourth quarter.
During the first quarter, cash flow from operations was $28.5 million compared with $19 million in the fourth quarter.
Capital expenditure during the reported quarter stood at $6.1 million, down from $9.5 million in the prior quarter.
Guidance
For second-quarter 2020, Advanced Energy expects non-GAAP earnings between 50 cents and $1.10 per share.
Revenues are anticipated in the range of $285-$345 million.
The company expects strong momentum across semiconductor equipment market and data center space.
However, industrial and telecom markets are expected to be sluggish in the near term. Further, COVID-19 related headwinds are major concerns.
How Have Estimates Been Moving Since Then?
Estimates revision followed an upward path over the past two months. The consensus estimate has shifted 34.36% due to these changes.
VGM Scores
Currently, Advanced Energy has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Advanced Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.