IPG Photonics (NASDAQ:IPGP) reported its third-quarter earnings before the opening bell today, and the market reacted appreciatively by sending the stock up nearly 5%. Let's look at the laser specialist's report to understand why the situation still looks bright for IPG. First, some headline numbers:
- $199.7 million in revenue (up 16% year over year).
- Analysts had expected $201 million in revenue.
- $1.05 in earnings per share (up 30% year over year).
- Analysts had expected $0.97 in EPS.
- Operating margin of 39% (second-best since 2010 behind second-quarter 2012).
- Net margin of 27.5% (tied with second-quarter 2012 for best since 2010).
IPG's weakest segment, high-power lasers, still enjoyed 10% sales growth year over year. The company posted gangbusters growth in sales of medium-power lasers (up 45% year over year) andquasi-continuous wave lasers (up 122%). Surprisingly strong sales in economically shaky Europe and China -- both markets saw 20%-plus sales growth year over year -- helped offset weaker sales to American and Japanese customers.
Looking ahead, IPG expects fourth-quarter revenue to range from $190 million to $205 million, with EPS from $0.86 to $1.01. The midpoint of these guidance ranges would result in year-over-year growth rates of 19.3% for revenue and 34.3% for EPS. The midpoints of both guidance ranges also surpass Wall Street's projections for revenue of $192.4 million and earnings of $0.90 per share. With these midpoints in mind, it now appears IPG is aiming for full-year revenue of roughly $761 million and full-year earnings of about $3.68 per share; both of these results would surpass Wall Street's full-year estimates of $756.2 million in revenue and $3.56 in EPS.
Now that we've examined IPG's key numbers, let's see how the company's revenue has grown over time:
As you can see, the company's sales tend to come in waves, which is to be expected for a supplier of highly specialized industrial equipment. From the looks of it, the company's fourth quarter will probably be another high point in the sales cycle, although revenue won't grow quite as fast as it has during previous highs.
Now a peek at IPG's bottom line in recent years:
You'll notice a much better trend here than on the top line, as IPG improved EPS growth rates for four consecutive quarters now, with the upcoming quarter looking to extend that streak to five. IPG's EPS grew by 29.6% year over year during the third quarter, which is the company's fastest EPS growth rate since early 2012, when trailing 12-month number was more than $1 lower than what was reported today
Alex Planes holds no financial position in any company mentioned here. Follow him on Twitter @TMFBiggles or connect with him on LinkedIn for more insight into investing, markets, economic history, and cutting-edge technology.
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