Key Points
Photronics beat earnings soundly this morning -- but guided lower for Q2.
Some of Photronics' Q2 sales may have been pulled forward into Q1.
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Photronics (NASDAQ: PLAB) stock, which makes "photomasks" (a device for laying out circuit designs on a semiconductor wafer to guide where the circuits should go) for the semiconductor industry, delivered its third-in-a-row earnings beat for investors this morning. Expected to earn $0.53 per share, according to Yahoo! Finance estimates, Photronics instead earned $0.61 per share in its fiscal Q1 2026 report.
Photronics shares are up 12% through 11:45 a.m. ET in response.
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Photronics Q1 earnings
Think that's good news? It gets better.
$0.61 was only the non-GAAP number. When calculated under generally accepted accounting principles (GAAP), Photronics actually earned $0.74 per share, up 9% from one year ago, and did so on a 6% increase in sales to $225.1 million.
Free cash flow for the quarter was $49.6 million, lagging reported net income but up 14.5% from one year ago, stronger growth than the company enjoyed in either sales or earnings.
Is Photronics stock a buy?
If there was bad news in the report, it was on management guidance. Photronics anticipates slowing sales growth in Q2 2026. With revenue only ranging between $212 million and $220 million ($216 million at the midpoint), Photronics is likely to grow sales only 2% year over year, suggesting some of the company's Q2 sales may have been pulled into Q1, and thus explaining the earnings beat.
Management didn't provide GAAP earnings guidance that we can compare to last year, but Photronics' non-GAAP forecast of about $0.52 per share implies at least a sequential decline in profits.
Priced at 16 times earnings, Photronics stock looks cheap -- if it can keep on growing double digits. If earnings start to stall out alongside sales growth, however, look out below.
Should you buy stock in Photronics right now?
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Rich Smith 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.
