Why Is IPG (IPGP) Down 13.8% Since Last Earnings Report?
A month has gone by since the last earnings report for IPG Photonics (IPGP). Shares have lost about 13.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is IPG due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
IPG Photonics Q2 Earnings Miss, Revenues Decline Y/Y
IPG Photonics reported earnings of 45 cents per share in second-quarter 2024, missing the Zacks Consensus Estimate by 6.25%. The company reported earnings of $1.31 per share in the year-ago quarter.
Revenues of $258 million declined 24% on a year-over-year basis but beat the consensus mark by 0.88%. Unfavorable forex hurt revenue growth by 2%.
The year-over-year decline was primarily due to lower sales in cutting and welding applications, although this was partially offset by growth in 3D printing, medical and advanced applications.
Emerging growth product sales contributed 46% to revenues, which improved sequentially driven by growth in handheld welding, medical and advanced applications.
Quarterly Details
Materials processing (88% of total revenues) fell 28% year over year. The downside was mainly due to reduced revenues in cutting and welding applications due to weak demand from industrial and e-mobility customers.
Revenues from other applications increased 24% year over year, primarily due to higher revenues in medical and advanced applications.
Sales dropped 2% in North America, 34% in China and 39% in Japan on a year-over-year basis. Moreover, sales decreased 27% year over year in Europe.
IPG Photonics reported a gross margin of 37.3%, down 610 basis points on a year-over-year basis. The downside was primarily due to lower absorption of manufacturing expenses and higher inventory reserves, partially offset by reduced tariffs and shipping costs.
Balance Sheet
As of Jun 30, 2024, IPG Photonics had $1.06 billion in cash & cash equivalents compared with $1.14 billion as of Mar 31, 2024.
Second-quarter 2024 cash flow from operations amounted to $53 million compared with the previous quarter’s reported figure of $55 million.
In the second quarter, IPG generated $53 million in cash from operations compared with the previous quarter’s reported figure of $55 million. The company spent $24 million on capital expenditures and allocated $122 million for share repurchases.
Guidance
For third-quarter 2024, IPG Photonics anticipates sales to be $210-$240 million. Earnings are projected between break-even and 30 cents per share.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -76.79% due to these changes.
VGM Scores
Currently, IPG has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise IPG has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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IPG Photonics Corporation (IPGP) : Free Stock Analysis Report