What happened
IPG Photonics (IPGP 0.52%) shares are in the red to the tune of 7.6% as of 11:45 a.m. ET Tuesday following the release of solid fiscal Q4 results marred by lackluster guidance for the year now underway.
So what
Industrial laser manufacturer IPG Photonics turned $364.5 million worth of sales during the three-month stretch ending in December into an operating profit of $1.21 per share. Those figures improved on year-ago comparisons of $336.6 million and $0.92, respectively. And the numbers were also better than the earnings of $1.19 per share and revenue of $353.4 million being modeled by analysts.
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Expectations for fiscal 2022, however, aren't nearly as impressive. The company expects revenue of between $320 million and $350 million for the current quarter, and full-year revenue growth of between 3% and 6% compared to 2021's top line of $1.46 billion. The analyst community was looking for sales of $368.3 million for the first quarter, and analysts' full-year revenue expectations for revenue of $1.58 billion would translate into a growth rate of a little more than 8%.
Now what
The sheer scope of Tuesday's tumble is jarring, but it is ultimately a buying opportunity.
Yes, guidance for the current year isn't what investors or analysts were hoping for. This, however, has already been priced in. Shares were already down more than 40% from their January 2021 high before today's rout, pulling the stock's valuation to abnormally low levels. Factoring in today's 7.6% sell-off drags shares down to a forward-looking price-to-earnings ratio of only 23.0, which is about as cheap as this stock's been in years. It's also possible the company's guidance is deliberately conservative.
Either way, from a risk-vs-reward perspective, today's new 52-week low may also be serving as a capitulation. Though lower by 7.6% as of the latest look, IPGP shares were down as much as 12.2% earlier today. This partial recovery implies patient, bargain-minded investors are already starting to step in.
