What happened

Shares of Photronics (PLAB 1.77%) were down 10% as of 11:07 a.m. ET on Wednesday after the company reported earnings results for the third quarter, ending July 30. 

Revenue was only slightly down from the record levels in the previous quarter, but Wall Street analysts were expecting more. As a result, revenue of $224.2 million missed estimates calling for $230 million, which led to the tumble in the share price today. The stock has now fallen 18% over the last month.

So what

Revenue increased 2% year over year, which is consistent with the single-digit average annual growth this company has reported over the last 10 years. 

The long-term demand outlook still looks favorable, as companies continue to invest in new displays for devices. Management also likes the trends favoring onshore production amid rising geopolitical risks.

However, Photronics experienced some mixed results in the quarter, which raises the uncertainty for near-term demand. The company saw lower high-end demand in flat-panel displays and integrated circuits. One area of strength was sales of AMOLED (active-matrix organic light-emitting diodes), which are used in mobile displays, but other markets were weaker than expected.

Now what

Guidance calls for fiscal fourth-quarter revenue to be between $222 million and $232 million. Earnings per share are expected in the range $0.51 to $0.59, compared to $0.47 for this quarter.

The near-term demand from the consumer end is very fluid right now. Photronics' results are consistent with the choppy sales that many retailers have reported this quarter.

The stock might stay under pressure until demand visibility is clearer, especially since the shares already trade at a fair price-to-sales ratio of 1.5, which is in line with Photronics' trading history.