Laser company IPG Photonics (IPGP 25.74%) stock got blasted for a 24.8% loss through 11:45 a.m. ET Tuesday morning despite beating on in its Q1 earnings report.
Heading into the report, analysts forecast IPG to earn $0.27 per share (pro forma) on $256.5 million in sales. In fact, IPG earned $0.29 per share on $265.5 million in sales.
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IPG Photonics Q1 earnings
Not all the news was good.
IPG grew sales an impressive 17% year over year, but profitability declined due to tariff costs. Gross profit margin dropped nearly two percentage points to 37.5%, pushing IPG into an operating loss. Interest on savings and "other" income helped even things out, but IPG's GAAP net profit of $0.04 per share was a whole lot less than the $0.29 per share pro forma profit noted above.
It was also more than 50% less than last year's Q1 profit.
NASDAQ: IPGP
Key Data Points
What's next for IPG Photonics stock?
Turning to guidance, IPO highlighted a book-to-bill ratio 1.0, indicating "robust demand for our solutions" and suggesting further sales growth ahead. In Q2, management forecasts sales between $260 million and $290 million, some improvement in gross margin on those sales, and pro forma profit between $0.25 to $0.55.
The bad news? While IPG's sales target looks fine and in line with analyst expectations, Wall Street was hoping IPG would promise $0.43 per share in profit -- and the midpoint of a range stretching from $0.25 to $0.55 is only $0.40 per share.
It's likely to be a small Q2 miss, but it's still a bigger miss than the Q1 beat. For a stock trading for 167 times earnings, it's too big for investors to forgive -- and that's why they're selling IPG Photonics stock today.
