Yahoo Finance Advanced Energy (AEIS) Up 11.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Advanced Energy Industries (AEIS). Shares have added about 11.7% 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 the most recent earnings report in order to get a better handle on the important drivers.
Advanced Energy Q1 Earnings Miss Estimates, Revenues Fall Y/Y
Advanced Energy Industries reported non-GAAP earnings of 58 cents per share in first-quarter 2024, missing the Zacks Consensus Estimate by 18.31%. The bottom-line figure declined 53.2% on a year-over-year basis.
Revenues of $327 million lagged the Zacks Consensus Estimate by 8.35% and declined 23% year over year, primarily due to the weakness across non-semi markets.
End Market in Detail
Semiconductor Equipment: Revenues (54.9% of total revenues) generated from the market fell 7.4% year over year to $179.9 million. The figure topped the Zacks Consensus Estimate by 7.94%.
Sequentially, revenues decreased 6%. The upside was primarily due to the surge in value-added services within the semiconductor segment.
Additionally, securing major design wins for next-generation plasma power products, namely the eVoS and eVerest systems, bolstered semiconductor revenue.
AEIS has already shipped more than 50 eVoS and eVerest systems, with another 150 systems requested before the year-end.
Industrial & Medical: Revenues (25.5% of the total revenues) from the market fell 32.2% year over year to $83.4 million and lagged the Zacks Consensus Estimate by 21.66%.
Soft market conditions hurt top-line growth.
Sequentially, revenues declined 23%. Nevertheless, AEIS launched new products, such as the Evergreen high-power platform in the industrial medical segment, which provides best-in-class efficiency and power density.
Data Center Computing: Revenues (12.8% of the total revenues) from the market were $41.9 million, down 29.8% year over year. The figure missed the consensus mark by 13.30%.
Sequentially, revenues declined 33%. The softness in the enterprise market was partially offset by the increased volume of the hyperscale product.
Telecom & Networking: Revenues (6.8% of the total revenues) generated from the market were $22.3 million, down 53.8% year over year. The figure missed the Zacks Consensus Estimate by 37.9%.
Sequentially, revenues declined 48%. The decline was primarily due to reduced infrastructure investments and high inventory levels.
Operating Results
In the first quarter, the non-GAAP gross margin was 35.12%, down 170 basis points (bps) on a year-over-year basis.
Non-GAAP operating expenses were $93.5 million, down 6.2% year over year. As a percentage of revenues, the figure increased 510 bps year over year to 28.6% in the reported quarter.
The non-GAAP operating margin was 6.6%, contracting 680 bps on a year-over-year basis.
Balance Sheet & Cash Flow
As of Mar 31, 2024, cash and cash equivalents were $1.01 billion compared with $1.05 million as of Dec 31, 2023.
In the first quarter of 2024, cash flow from operations was $8 million, down from $85 million in the fourth quarter of 2023.
Advanced Energy made dividend payments of $3.8 million in the reported quarter.
Guidance
For second-quarter 2024, Advanced Energy expects non-GAAP earnings of 73 cents per share (+/- 25 cents).
Advanced Energy anticipates revenues of $350 million (+/- $20 million).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -30.11% due to these changes.
VGM Scores
At this time, Advanced Energy has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Advanced Energy has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Advanced Energy is part of the Zacks Semiconductor Equipment - Wafer Fabrication industry. Over the past month, Lam Research (LRCX), a stock from the same industry, has gained 7.6%. The company reported its results for the quarter ended March 2024 more than a month ago.
Lam Research reported revenues of $3.79 billion in the last reported quarter, representing a year-over-year change of -2%. EPS of $7.79 for the same period compares with $6.99 a year ago.
Lam Research is expected to post earnings of $7.52 per share for the current quarter, representing a year-over-year change of +25.8%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.6%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Lam Research. Also, the stock has a VGM Score of B.
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Advanced Energy Industries, Inc. (AEIS) : Free Stock Analysis Report
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