Why Ultra Clean Holdings, Inc. Stock Fell 19.2% in July

What happened

Shares of Ultra Clean Holdings Inc. (NASDAQ: UCTT) declined 19.2% in July, according to data from S&P Global Market Intelligence , after the semiconductor equipment specialist announced mixed second-quarter 2018 results and disappointing forward guidance.

Ultra Clean Holdings declined as much as 11% the day after its quarterly report hit the wires late last month. In that report, the company revealed that revenue had climbed 27.1% year over year to $290.2 million, which translated to adjusted net income of $21.5 million, or $0.55 per share, down from $0.62 per share in the same year-ago period.

Analysts, on average, were looking for earnings of $0.57 per share on roughly the same revenue.

Stock market data on a yellow display with red and green arrows indicating direction


So what

Ultra Clean CEO Jim Scholhamer noted the quarter's performance was "largely as expected, with a moderate sequential decline in our semiconductor capital equipment business off an excellent first quarter."

However, he also told investors that, after "recent announcements of spending push-outs from large semiconductor manufacturers," Ultra Clean anticipates lower capital equipment forecasts in the short term.

Now what

As such, Ultra Clean sees third-quarter revenue between $200 million and $220 million, with adjusted earnings per share of $0.28 to $0.38. Here again, most people watching the stock were modeling Q3 earnings of $0.42 per share on significantly higher revenue of $246 million.

This doesn't mean that Ultra Clean is a broken business. After all, those "spending push-outs" appear more than anything to be temporary delays in orders from some larger semiconductor clients. But our market hates being told to essentially hurry up and wait, and it's no surprise to see Ultra Clean stock pulling back last month in response.

10 stocks we like better than Ultra Clean Holdings
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Ultra Clean Holdings wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

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: Personal Finance , Stocks
Referenced Symbols: UCTT

More from Motley Fool


Motley Fool

Motley Fool

Market News, Investing

Research Brokers before you trade

Want to trade FX?