Shares of Ultra Clean Holdings (UCTT 3.00%) fell as much as 23.9% in Thursday's morning session. The maker of manufacturing equipment for the semiconductor industry reported mixed earnings on Wednesday night, and investors were quick to fixate on Ultra Clean's earnings miss.
Ultra Clean's third-quarter sales jumped 66% higher, compared to the year-ago period, to land at $243 million. On the bottom line, adjusted earnings more than tripled to $0.62 per share.
Analysts were looking for earnings near $0.64 per share on revenue in the neighborhood of $240 million. The sales result was near the top end of management's guidance while earnings fell to the bottom end of the official guidance range.
There was actually a lot of good news baked into this release. Semiconductor makers around the world are making large infrastructure investments to support their own growth plans, which is great for Ultra Clean and its sector peers. Looking ahead, Ultra Clean's guidance pointed to fourth-quarter sales of approximately $245 million and adjusted earnings of roughly $0.60 per diluted share. Both of these targets are more optimistic than Wall Street's consensus view, which currently calls for earnings of $0.55 per share on $229 million in top-line revenue.
Keep in mind that earnings are growing at a fantastic pace. The only ghost hiding behind the low-end profit performance here was a slight shift in the product mix, as Ultra Clean is making an effort to increase its market presence in the Far East where most of its direct customers can be found. That's hardly cause for a game-changing panic.
That being said, you can't blame market makers for taking some profits off the table here -- stock prices had more than quadrupled over the 52 weeks leading up to this report. Ultra Clean shares are not expensive, even after that tremendous one-year climb, and I see no reason to avoid it when given a sudden discount to work with.