IPG Photonics Looks to Keep Earnings Laser-Hot

By Markets Fool.com


Source: IPG Photonics.

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The number of applications that lasers have throughout the business world has skyrocketed in recent years, and IPG Photonics is one of the companies that has benefited the most from the rise in popularity and use of laser products. With the company building up expertise in laser applications ranging from telecom and energy to automotive and defense, IPG Photonics has a technological advantage over many of its competitors that it has used to bolster its business presence in the industry. With IPG Photonics slated to announce its first-quarter earnings Tuesday morning, shareholders are looking for a reason to send the stock even higher from its huge gains recently. Let's look more closely at IPG Photonics and what it's likely to tell investors about its future prospects when it releases its latest financial report.

Stats on IPG Photonics

Analyst EPS Estimate

$0.98

Change From Year-Ago EPS

27%

Revenue Estimate

$200.87 million

Change From Year-Ago Revenue

17.8%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

IPG Photonics earnings look to get even shinier
Investors have continued to remain optimistic about IPG Photonics earnings, having lifted their first-quarter earnings expectations by $0.06 per share in recent months and lifting their full-year 2015 and 2016 projections by about 4%. The stock has soared 28% since late January, as the company has impressed those who follow it with its recent progress toward grabbing an even tighter grip on the laser market.

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IPG Photonics had an extremely strong fourth quarter to help give it momentum coming into 2015. The company saw revenue jump 25% during the quarter, lifting net income by more than half. Strength in the auto industry and in metal processing helped drive the solid results from IPG Photonics, and the increase in guidance for the first quarter resulted in the upgrades that investors have seen in the consensus expectations for the company this time around.


Source: IPG Photonics.

The potential to get even more business from automobile manufacturers is still a huge prospect for IPG Photonics. The company's unique process for working with zinc in order to produce zinc-coated steel for use in vehicles involves technology using multiple laser beams, and automakers looking to maximize efficiency could well want to take advantage of IPG Photonics' products in order to streamline their production process. The laser-maker also has expertise in working with other materials, including aluminum, titanium, ceramics, and plastics, and the auto industry has increasingly turned to these materials in order to lighten vehicles while retaining strength. Moreover, now that automakers are flush with profits, spending on capital expenditures to upgrade laser systems to the state-of-the-art equipment that IPG Photonics offers could be another big boon to the company going forward.

Looking more broadly, though, the key to IPG Photonics' success remains the superior performance of its fiber-based lasers. Conventional lasers have traditionally been cheaper than more advanced laser technology, but those cost disadvantages have started to diminish as IPG Photonics scales up its business. Nevertheless, IPG Photonics still enjoys high margins compared to its laser-maker peers, with the company's production of its own laser components helping immensely in capturing the maximum amount of profit possible from its product offerings.

In the IPG Photonics earnings report, look closely to see how the company is currently balancing price reductions with an emphasis on profit growth. In the past, IPG Photonics has tended to pass on a sizable portion of its efficiency gains to customers in the form of lower prices, but recently, the company has sought to hold the line on pricing. If it can succeed in building up more business without reducing its prices to customers, then IPG Photonics could see even more gains as long as its laser technology remains a hot commodity.

The article IPG Photonics Looks to Keep Earnings Laser-Hot originally appeared on Fool.com.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends IPG Photonics. The Motley Fool owns shares of IPG Photonics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.