Shares of IPG Photonics (NASDAQ:IPGP) rose 15.1% in October 2017, according to data from S&P Global Market Intelligence. The maker of lasers and fiber-optic components used to build optical networking systems and industrial manufacturing tools started rising on bullish analyst notes, then finished the job with an earnings-based 3% jump on the last day of October.
In the third quarter of 2017, IPG's top-line sales rose 48% year over year to $393 million. Further down the income statement, GAAP earnings increased by 64% to land at $2.11 per diluted share. Analysts would have settled for earnings of $1.82 per share on revenue near $366 million.
These numbers proved the bullish analysts absolutely right, and then some. IPG's solid report rested on 70% sales growth in China and 50% higher European revenues, offset by just 10% higher sales in Japan. The company enjoyed strong demand for high-powered industrial lasers, led by cutting and welding applications as well as a 104% sure in orders for quasi-continuous wave, or QCW, lasers -- an extremely high-powered fiber laser used in welding and drilling systems.
IPG shareholders have enjoyed a market-crushing return of 136% over the last year, leaving the stock a bit overheated. Trading at a generous 37 times trailing earnings and 10 times sales, IPG Photonics' shares might be overdue for a correction. Therefore, I'm content to watch this laser-powered lightshow from the sidelines for now.