IPG Photonics' (IPGP) Q3 Earnings: Disappointment in Store?

Shutterstock photo

IPG Photonics Corporation IPGP is scheduled to report third-quarter 2018 results on Oct 30.

The company reported second-quarter 2018 earnings of $2.21 per share, missing the Zacks Consensus Estimate by a penny. However, the bottom line fared better than the year-ago figure of $1.91 per share.

Strong year-over-year growth was driven by a surge of 11.9% in sales from the year-ago quarter to $413.6 million. However, the figure lagged the Zacks Consensus Estimate of $418 million.

Preliminary Q3 Results & Estimates

IPG Photonics anticipates preliminary revenues to range between $355 million and $356 million for the third quarter, down from the previous guidance of $360-$390 million provided on Jul 31. The corresponding Zacks Consensus Estimate is pegged at $355.2 million, indicating a decline of 9.5% from the year-ago quarter.

The company also projects third-quarter earnings to be in the range of $1.83-$1.87 per share, compared with the previous guidance of 1.80-$2.05 per share. Estimates have been going down in the past 30 days. The Zacks Consensus Estimate is pegged at $1.85 per share.

Let's see how things are shaping up for the upcoming announcement.

Factors Likely to Influence Q3 Results

Primarily, the robust adoption of 6 kilowatt ultra-high power continuous wave (CW) lasers is expected to support revenues in high-power CW lasers segment. Notably, this accounted for 64% of total revenues in the previous quarter, surging 20% from the year-ago quarter. Further, the Zacks Consensus Estimate for high power CW lasers revenues is pegged at $235 million, down from $244 million in the prior-year period.

Although, medium power laser sales declined 7% on a year-over-year basis in the second quarter, strength in 3D printing and welding applications is anticipated to bolster revenues in the to-be-reported quarter. The Zacks Consensus Estimate for medium power lasers revenues is projected to be $32.85 million, above $30.42 million in the year-ago quarter.

Quasi CW Lasers sales are anticipated to be impacted primarily owing to estimated reduction in demand pertaining to customers' electronics investment cycle. The corresponding Zacks Consensus Estimate for revenues are pegged at $21.01 million, down from $23.77 million reported in the prior-year period.

IPG Photonics' significant exposure to the materials processing markets is a cause of concern. Nevertheless, Other product sales are anticipated to deliver growth on the back of solid adoption of systems and beam delivery accessories.

Moreover, sturdy demand for a variety of applications, particularly lower end laser cutting systems across China, is likely to aid the to-be-reported quarter's financials.

Robust integration of the company's business model with vertically-integrated manufacturing operation, production & operations management, is likely to be a tailwind.

IPG Photonics Corporation Price and EPS Surprise

IPG Photonics Corporation Price and EPS Surprise | IPG Photonics Corporation Quote

What Our Model Says

According to the Zacks model, a company with a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good chances of beating estimates if it also has a positive Earnings ESP . The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

IPG Photonics has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Stocks With Favorable Combination

Here are few companies which as per our model have the right combination of elements to post an earnings beat this quarter:

Ameren Corporation AEE has an Earnings ESP of +8.65% and a Zacks Rank #1. The company is slated to report third-quarter earnings on Oct 31. You can see the complete list of today's Zacks #1 Rank stocks here .

Athene Holding Ltd. ATH has an Earnings ESP of +1.62% and a Zacks Rank #1. The company is slated to report third-quarter earnings on Oct 31.

Herbalife LTD. HLF has an Earnings ESP of +2.29% and a Zacks Rank #2. The company is slated to report third-quarter earnings on Oct 30.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Ameren Corporation (AEE): Free Stock Analysis Report

Athene Holding Ltd. (ATH): Free Stock Analysis Report

IPG Photonics Corporation (IPGP): Free Stock Analysis Report

Herbalife LTD. (HLF): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: AEE , ATH , IPGP , HLF

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?