Photronics (PLAB) had record-setting results in its last quarterly report. Earnings are expected to more than double this year and estimates are still rising.
This Zacks #1 Rank (Strong Buy) is also showing some value and could be trading at an excellent entry point.
Company Description
Photronics is a global photomask maker, which are highly precise quartz plates used for electronic circuits. The products are used in making semiconductors and flat panel displays.
Record Quarter
On May 16 the company announced record sales of $133 million, which was $12 million higher than the upper end of their guidance. The top line grew 27% to the highest level in Photronics history.
Net income also hit a company record, more than tripling to $14.8 million. That works out to $0.24 per share, which was 7 cents higher than the Zacks Consensus Estimate.
Additionally, margins continued to widen and the company’s efforts to recapitalize its balance sheet have led to more financial flexibility.
Forecasts Looking Good
Analysts polled by Zacks raised full-year expectations by a dime on average, to $0.81. Next year’s average estimate is up 12 cents, to $0.84. Last year Photronics earned $0.38, putting growth rates at 113% and 4%, respectively.
Right now shares are trading at just 10 times this year’s estimate. The long-term growth rate is at 11%, giving PLAB a PEG ratio of 0.9. So, there is plenty of value here. Price to sales and price to book are right near 1.0.
The Chart
Some tech companies have given weak guidance and that has led to a drag on shares of PLAB. Is that already priced in? It is a gamble but that could this could turn out to be a fantastic price point for PLAB.
The stochastic is showing that shares are oversold and there could be some support at this level.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service
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