What happened
Shares of silicon semiconductor chip tester Aehr Test Systems (AEHR 5.93%) exploded higher after the company beat fiscal second-quarter 2023 earnings on Friday, rising 40.3% through noon ET.
Heading into earnings, analysts had predicted Aehr would earn $0.08 per share on $12.8 million in revenue for the period ended Nov. 30. In fact, when earnings came out last night, profits doubled the expected number -- $0.16 per share -- and sales beat by $2 million -- $14.8 million.
NASDAQ: AEHR
Key Data Points
So what
Not only did Aehr's sales beat expectations, but Aehr posted absolute sales growth that was absolutely fantastic -- 54% year over year -- a fact that management attributed to "strength of semiconductor test and burn-in sales for electric vehicles." (That's something to keep in mind, by the way, if you invest not only in semiconductors, but in electric vehicle (EV) stocks as well. Apparently, sales of EVs are doing better than some media outlets have been reporting.)
On earnings, the picture is a bit more complicated. On the one hand, Aehr noted that its earnings as calculated according to generally accepted accounting principles (GAAP) were only $0.13 per share -- so less the the $0.16 headline profit, which is a non-GAAP (adjusted) number. On the other hand, GAAP earnings a year ago were only $0.03 per share -- so growth to even $0.13 per share implies a more than fourfold increase in profit, versus the non-GAAP increase which was "only" threefold.
Any way you cut it, this was a most impressive quarter for Aehr Test Systems.
Now what
Do be aware, however, that next quarter might not be quite as great. Aehr noted that bookings in fiscal Q2 were only $10.8 million. Compared to the $14.8 million in Q2 revenue, that works out to a book-to-bill ratio of only about 0.7, implying that sales may slow in coming quarters.
That being said, over the whole of the fiscal third quarter, Aehr is standing pat on its prediction of full-year revenue in the $60 million to $70 million range, and with "strong profit margins similar to last fiscal year." According to data from S&P Global Market Intelligence, net profit margin in fiscal 2022 was 18.6%, implying that full-year GAAP profits will be at least $11.2 million, or $0.40 per diluted share -- and potentially as much as $0.47 per share, or up 39% year over year.
When you consider that Wall Street analysts are only forecasting about 29% earnings growth that year, I'd say the chances for Aehr continuing to crush earnings expectations, all year long, look pretty darn good.
