Shares of IPG Photonics Corp. (IPGP) opened higher yesterday morning, following the company’s record third-quarter report. Even though, share prices have dropped a little bit today, I still have high hopes for this company. In today’s blog, we’ll take a closer look at IPGP’s earnings results and what they mean going forward.
During the quarter, revenue for IPG Photonics rose 48% year-over-year to $392.6 million. This beat the $366.0 million consensus estimate by 7.3%. Over the same period, earnings surged 64% to $2.11 per share. Analysts were expecting $1.82 EPS, so IPG Photonics posted a massive 15.9% earnings surprise.
For those of you who aren’t familiar with it, IPG Photonics was founded in 1990 and is headquartered in Oxford, Massachusetts. It develops and manufactures a range of high-performance fiber lasers, fiber amplifiers and diode lasers used in various applications, but primarily in materials processing worldwide.
The company’s laser products include low, medium and high output power lasers. It also provides erbium-doped fiber and Raman amplifiers, as well as integrated communications systems, which are deployed in broadband networks, such as fiber to the home. Its lasers and amplifiers are also used in advanced, communications and medical applications. The company markets its products to original equipment manufacturers, system integrators and end users through direct sales force, as well as through agreements with independent sales representatives and distributors.
In a nutshell, IPG Photonics is the world’s leading provider of high-power fiber lasers. Fiber lasers are the next generation of laser technology and offer many advantages over traditional lasers. They are more energy efficient, easier to maintain, and they last longer. As companies upgrade their current technologies with fiber-laser applications, IPG Photonics’ sales and earnings are booming.
That’s why, looking ahead to the fourth quarter, IPG Photonics expects revenue between $330 million and $355 million, which represents 17.8% to 26.4% annual sales growth. This revenue outlook reflects the expected slowdown in spending related to the consumer electronics investment cycle and typical seasonality in China. Earnings per share are forecast to be between $1.55 and $1.80, or 11.5% to 29.5% annual earnings growth.
All this good news leads to an overall positive review of IPGP in my Portfolio Grader system. The company maintains an A-rating, making it a Strong Buy. Moreover, IPGP has brought my Blue Chip Growth readers a solid 38% return over the last quarter.
Of course, only Blue Chip Growth readers know my exclusive Buy Below price. So if you’re interested in IPGP, I urge you to seriously consider joining that service. But if you’re simply looking for more Strong Buys this earnings season, please stay tuned into this blog. I’ll continue reviewing some of my favorite stocks’ results right here.