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Category: Stock Market and Advanced Energy
Date: 21 September 2019 Stock Price: $18.39 We take a look at the 2nd quarter earnings release of their 2019 fiscal year of Advanced Energy a designer and manufacturer of highly engineered power conversion, measurement and control solutions.
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About Advanced Energy
Advanced Energy (Nasdaq: AEIS) is a global leader in the design and manufacturing of highly engineered, precision power conversion, measurement and control solutions for mission-critical applications and processes. AE’s power solutions enable customer innovation in complex semiconductor and industrial manufacturing applications. With engineering know-how and responsive service and support around the globe, the company builds collaborative partnerships to meet technology advances, propel growth for its customers and innovate the future of power. Advanced Energy has devoted more than three decades to perfecting power for its global customers and is headquartered in Fort Collins, Colorado, USA
Overview of Advance Energy's latest earnings report
The numbers we are interested in (for the quarter):
- Revenue: $134,810 million (down from $196,032 million from the same quarter of the previous year)
- Revenue decreased by -31% over the last 12 months
- Cost of sales: $70.684 million (up from $97.797million for the same quarter of the previous year)
- Cost of sales decreased by-27,7% over the last 12 months
- Net earnings: $31.686 million (down from $46.361 million for the same quarter of the previous year)
- Diluted income per share: $082 (up from $1.17 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 38.462 million (up from 39.603 million for the same quarter of the previous year)
- Cash and cash equivalents: $359.070 million
- Cash and cash equivalents per share: $9.33
- Cash and cash equivalents makes up 50.7% of Advanced Energy's market capital
- Cash and cash equivalents makes up 41.47% of Advanced Energy's total assets
- Inventories: $92.740 million
- Inventories makes up 10.7% of Advanced Energy's total assets
- Accounts receivable: $93.045 million
- Accounts receivable makes up 10.74% of Advanced Energy's total assets
- Stockholders equity of Advanced Energy: $656.049 million
- Stockholders equity per share: $17.05
- Advanced Energy is trading at 1.07 times its stockholders equity per share. It is trading outside the expected range as most firms tend to trade at levels between 2 and 4 times its stated stockholders equity per share.
Advanced Energy's management commentary on the results and earnings guidance
FORT COLLINS, Colo.--(BUSINESS WIRE)--Aug. 5, 2019-- Advanced Energy Industries, Inc. (Nasdaq: AEIS) today announced financial results for the second quarter ended June 30, 2019.
Sales were $134.8 million in the second quarter of 2019 compared with $140.7 million in the first quarter of 2019 and $196.0 million in the second quarter of 2018. GAAP net income from continuing operations was $23.4 million or $0.61 per diluted share, compared with $15.4 million or $0.40 per diluted share in the prior quarter, and $46.4 million or $1.17 per diluted share in the second quarter of 2018.
Non-GAAP net income was $17.2 million or $0.45 per diluted share in the second quarter of 2019. This compares with $22.4 million or $0.58 per diluted share in the first quarter of 2019, and $49.4 million or $1.25 per diluted share in the second quarter of 2018. A reconciliation of non-GAAP measures is provided in the tables below. The company generated $11.5 million of operating cash from continuing operations in the quarter.
“Our strong operating performance in the face of continued market weakness enabled us to deliver solid results in the quarter. Also, we continued to see strong adoption of our technologies into our customers’ next-generation manufacturing processes,” said Yuval Wasserman, president and CEO. “Further, we believe the pending acquisition of Artesyn Embedded Power will provide a platform for more balanced and steady growth going forward. Despite the current market slowdown, we are executing our strategy to deliver strong long-term earnings growth."
Third Quarter 2019 Guidance
Based on the company’s current view, beliefs and assumptions, guidance for the third quarter of 2019 is within the following ranges.
Sales were $134.8 million in the second quarter of 2019 compared with $140.7 million in the first quarter of 2019 and $196.0 million in the second quarter of 2018. GAAP net income from continuing operations was $23.4 million or $0.61 per diluted share, compared with $15.4 million or $0.40 per diluted share in the prior quarter, and $46.4 million or $1.17 per diluted share in the second quarter of 2018.
Non-GAAP net income was $17.2 million or $0.45 per diluted share in the second quarter of 2019. This compares with $22.4 million or $0.58 per diluted share in the first quarter of 2019, and $49.4 million or $1.25 per diluted share in the second quarter of 2018. A reconciliation of non-GAAP measures is provided in the tables below. The company generated $11.5 million of operating cash from continuing operations in the quarter.
“Our strong operating performance in the face of continued market weakness enabled us to deliver solid results in the quarter. Also, we continued to see strong adoption of our technologies into our customers’ next-generation manufacturing processes,” said Yuval Wasserman, president and CEO. “Further, we believe the pending acquisition of Artesyn Embedded Power will provide a platform for more balanced and steady growth going forward. Despite the current market slowdown, we are executing our strategy to deliver strong long-term earnings growth."
Third Quarter 2019 Guidance
Based on the company’s current view, beliefs and assumptions, guidance for the third quarter of 2019 is within the following ranges.
- Revenues: $128M +/- $5M
- GAAP EPS from continuing operations: $0.18 - $0.28
- Non-GAAP EPS: $0.28 - $0.38
Advanced Enery (NASDAQ: AEIS) stock price history
The image below, obtained from Google, shows the stock price history of Advanced Energy (NASDAQ: AEIS) since its listing. And it's been a very good time for Advanced Energy stockholders. 5 years ago the stock of Advanced Energy was trading at $19 a stock, and its currently it's trading at $56.34. Thats s return of 196% offered over the last 5 years. The stock is also trading at a lot closer to its 52 week high of $60.76 than it is to its 52 week low of $38.74 which to us is a clear indication that the short term sentiment and momentum of the stock is positive.
Advanced Energy (NASDAQ: AIES) latest stock valuation
So based on the earnings report of Advanced Energy (NASDAQ:AEIS) and the latest earnings guidance provided what do we value Advanced Energy's stock at? Based on this the group our target (full value) price for Advanced Energy at $41 a stock. We therefore believe the stock of Advanced Energy (AEIS) is overvalued
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $41 Therefore we believe the a good entry point into the stock is below $36.90. We believe that the stock will decline to levels closer our target (full value) price in coming weeks and months.
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $41 Therefore we believe the a good entry point into the stock is below $36.90. We believe that the stock will decline to levels closer our target (full value) price in coming weeks and months.