What happened

Shares of Universal Display (OLED 1.10%) put on a colorful show in high resolution Friday morning, rising by as much as 14.5%. That surge was sparked by the impressive second-quarter report that the energy-efficient displays and lighting technologist released after the market closed Thursday afternoon.

So what

Universal Display's revenues rose 7.3% year over year in the second quarter, landing at $147 million. Earnings jumped 20% to $1.04 per diluted share. Your average Wall Street analyst would have settled for earnings of roughly $0.75 per share on sales near $129 million. This wasn't a close call -- the organic light-emitting diode (OLED) specialist smashed those consensus estimates by a wide margin.

Management also lifted the bottom end of its full-year revenue guidance by 2%. The midpoint of its new 2023 revenue guidance range is $580 million.

"The OLED industry continues to lay the groundwork for promising growth in 2024 and beyond as the OLED IT adoption wave is poised to commence," CFO Brian Millard said in the earnings press release.

In other words, the supply-side manufacturing infrastructure for OLED panels is ready to take advantage of a new market. The wide adoption of organic light-emitting diode (OLED) screens in smartphones and their increased popularity in high-end TV sets should be followed by makers of tablets and laptop computers introducing models with OLED displays in 2024.

Now what

2023 will go down in Universal Display's history as a rebuilding year, as even the top of its raised revenue guidance range is still shy of last year's $1.617 billion haul. The OLED revolution continues its slow roll, held back by limited manufacturing facilities.

OLED screens are becoming the standard for those seeking quality, energy-efficient displays, from smartphones to high-end TV sets, and soon, tablets and laptops. Along the way, Universal Display collects patent licensing royalties and material distribution fees for every square inch of OLED screen that rolls off a manufacturing line.

After Friday's sharp jump, Universal Display's stock is trading at a 52-week high. However, it's still nearly 50% below the all-time high it set in 2021. The stock isn't cheap at 36 times earnings, but you're not buying an expensive lottery ticket. It's OK to pay a premium price for a great company with proven high-growth chops and tons of untapped potential. And that's what you get with Universal Display's stock these days.