What happened
Aehr Test Systems (AEHR 4.17%) stock jumped 45.9% in October, according to data from S&P Global Market Intelligence. For context, the S&P 500 and Nasdaq Composite indexes returned 8.1% and 3.9%, respectively, last month.
The primary catalyst for its stock's big gain was the semiconductor test and reliability qualification equipment supplier's release of a robust report for its first quarter of fiscal 2023, which ended Aug. 31, 2022.
This month, Aehr stock is up 3.7% as of Nov. 7, while the S&P 500 is down 1.7% over this period.
So what
On Oct. 7, Aehr Test Systems stock soared 23.9%, following the company's release of its quarterly report that excited investors. The quarter's revenue and earnings sped by the Wall Street consensus estimates and management reaffirmed its full-year guidance.
In 2022, many companies have been lowering their outlook due to uncertainty surrounding the macroeconomic environment and recession concerns. This dynamic has led many investors to view a company's reaffirmation of its annual guidance in a more positive light than they might have done prior to this year when the market's general direction was up.
Image source: Getty Images.
In its fiscal first quarter, Aehr's revenue surged 89% year over year to $10.7 million, primarily driven by higher demand for silicon carbide semiconductors for electric vehicles (EVs). Adjusted for one-time items, net income was $1.3 million, or $0.05 per share, up from a net loss of $414,000, or $0.02 per share, in the year-ago period.
Wall Street was looking for adjusted earnings per share (EPS) of $0.01 on revenue of $8.5 million, so Aehr easily exceeded both expectations.
Aehr stock continued its upward trajectory throughout last month, likely due to a combination of the positive momentum stemming from its quarterly report and a tailwind from the market, which rose in the latter part of October.
Now what
For fiscal year 2023 (ending May 31), management reiterated its guidance for revenue in the range of $60 million to $70 million, which would represent annual growth of 18% to 38%. It also expects a strong profit margin similar to last fiscal year. In fiscal 2022, its adjusted profit margin (adjusted net income divided by revenue) was 23%.
Aehr Test Systems is small-cap (market cap between $300 million and $2 billion) growth stock that's worth watching.
