Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Shares of AXT Inc. Moved Higher Today

By Timothy Green - Feb 23, 2017 at 3:29PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Revenue and earnings surged during the fourth quarter, and the company sees opportunities for growth in 2017.

What happened

Shares of semiconductor substrate manufacturer AXT Inc. ( AXTI 0.71% ) jumped on Thursday following the company's fourth-quarter report. Revenue and earnings rose on a year-over-year basis, beating analyst estimates substantially. The stock was up 14% at 2:45 p.m. EST.

So what

AXT reported fourth-quarter revenue of $20.3 million, up 12.3% year over year and about $1.2 million higher than the average analyst estimate. Full-year revenue was $81.3 million, up from $77.5 million in 2015. CEO Morris Young pointed to diversification as a key driver of the company's growth.

The AXT logo.

Image source: AXT Inc.

EPS came in at $0.06, up from a loss of $0.04 in the prior-year period and $0.03 better than analysts were expecting. Gross margin soared to 37.1%, up from just 17.1% during the prior-year period. This gross margin expansion was the main driver of AXT's earnings growth.

Young discussed the company's progress in 2016: "We saw healthy demand across our substrate product portfolio, driven by a growing number of exciting technology applications. In addition, we continued to demonstrate improvement in our business model, achieving meaningful gross margin expansion and delivering solid profitability and positive cash flow.

Now what

Looking forward to 2017, Young sees multiple opportunities for growth: "As we look ahead in 2017, we believe sales of indium phosphide substrates will continue to be a key driver for our business, and we hope to see traction in the 3-D sensing market later this year."

Shares of AXT were already up nearly 180% from the beginning of 2016 through market close on Wednesday. With the company performing well, investors had no trouble pushing the stock up even higher on Thursday.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

AXT, Inc. Stock Quote
AXT, Inc.
AXTI
$8.55 (0.71%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
652%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/08/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.