Why Advanced Energy Industries Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Advanced Energy Industries (NASDAQ: AEIS  ) jumped more than 21% during intraday trading Tuesday after the solar power conversion solutions specialist announced mixed third-quarter results and strong forward guidance.

So what: Quarterly revenue grew 21.6% to $142.9 million, which translated to non-GAAP earnings of $0.53 per share. For reference, analysts were looking for significantly lower adjusted earnings of $0.35 per share on higher sales of $146.61 million.

In addition, Advanced Energy said it expects fourth-quarter sales of $145 million to $155 milion, with non-GAAP earnings per share of $0.59 to $0.63. Analysts, on average, were expecting fourth-quarter earnings of just $0.38 per share on sales of $150.48 million.

Now what: CEO Garry Rogerson weighed in: "As we approach the end of 2013, we had yet another sound quarter reflecting the significant progress we are making toward our strategic objectives. [...] Clearly, we are demonstrating the effectiveness of our low-cost, distributed R&D, centralized manufacturing model."

To be sure, while shares may look expensive looking back at 134 times last year's earnings, they appear much more reasonable at 14.9 times next year's estimated earnings. Assuming Advanced Energy can continue growing into its outsized valuation and maintain its solid balance sheet going forward, patient long-term investors could stand to be handsomely rewarded.

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9/23/2016 4:00 PM
AEIS $46.18 Down -0.78 -1.66%
Advanced Energy In… CAPS Rating: *****