Universal Display Earnings: An Early Look

Earnings season is now starting to wind down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Universal Display (NASDAQ: OLED  ) is one of them. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise.

Universal Display uses its organic LED technology to produce materials for flat-panel displays and other lighting applications. With a huge number of relationships with display companies, Universal Display has plenty of prospects, but will it capitalize on the opportunity it has? Let's take an early look at what's been happening with Universal Display over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on Universal Display

Analyst EPS Estimate

$0.13

Change From Year-Ago EPS

(19%)

Revenue Estimate

$26.43 million

Change From Year-Ago Revenue

42%

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Will Universal Display paint a pretty picture?
Analysts have been nervous about Universal Display lately, holding their fourth-quarter estimates steady but cutting their EPS consensus for full-year 2013 by $0.14 over the past three months. Yet the stock has been on fire, rising nearly 40% since mid-November.

Universal Display is counting on organic LED as the wave of the future that will replace traditional LCD and LED technology. With a huge patent portfolio, Universal Display benefits whenever a licensee develops an OLED-based device that relies on its intellectual property. For instance, earlier this month, the company's shares spiked upward when Samsung said it would use OLED-based displays in its Galaxy 5 smartphone.

But much of Universal Display's potential still lies in the future. OLED licensees Samsung, LG Display (NYSE: LPL  ) , and AU Optronics are all looking to cash in on the increasing demand for large-screen OLED TVs to complement the baby steps they've taken in smartphones and tablets. Yet even with big factories planned, LG and Samsung don't expect to start ramping up full-sized display production until 2014, so investors need to be willing to wait before the benefits hit the bottom lines of either those display companies or Universal Display.

Moreover, not everyone is sold on OLED as a technology. Apple's Tim Cook, for instance, criticized OLED as being inferior to Apple's existing Retina display, especially in terms of color. Yet because OLED uses less power, it might still make sense as an alternative for Apple down the road.

In Universal Display's report, watch closely for signs of how its relationships with Samsung and LG are going. OLED TV sales are still critical for the company going forward, and after a disappointing third quarter, Universal Display needs to demonstrate its ability to clear its inventory.

To get the whole story behind Universal Display, be sure to check out our premium research report on the OLED giant. Inside, Fool tech specialist Evan Niu, CFA, examines Universal Display's enormous sales growth potential from tablets and smartphones, and also gives guidance on the potential risks of the company. Don't wait; get access to this comprehensive report by simply clicking here now.

Click here to add Universal Display to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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