Continue Reading Below
Shares of semiconductor photomask manufacturer Photronics (NASDAQ: PLAB) slumped on Wednesday after the company reported fiscal second-quarter results. Photronics missed analyst estimates across the board, posting a larger-than-expected revenue decline. The stock was down about 9.1% as of 1:11 p.m. EDT.
Photronics reported second-quarter revenue of $108.3 million, down 12% year over year and nearly $3 million below the average analyst estimate. Integrated circuit photomasks generated $82.6 million of revenue, down 9% year over year, while flat-panel display photomasks produced $25.7 million of revenue, down 20% year over year.
Image source: Photronics.
Net income came in at $0.03 per share, down from $0.16 per share during the prior-year period and $0.02 shy of analyst expectations. Photronics CEO Peter Kirlin explained the earnings shortfall while emphasizing the progress the company made during the quarter:
Continue Reading Below
Operating margin decreased mainly due to a drop in gross margin as a result of an unfavorable product mix. We were able to generate cash, building upon our already strong balance sheet. Strategically, we achieved three important milestones since our first quarter report: the first of two new writing tools is being installed to add FPD capacity; construction began on our new China IC facility; and this morning we announced a new joint venture inChina.
Kirlin is "cautiously optimistic" that Photronics will achieve sales growth and margin expansion in the third quarter. He pointed to rapidly strengthening demand in the flat-panel display segment as a reason for optimism, as well as the fact that the company's facilities are running at full capacity. Photronics guided for between $110 million and $120 million of revenue for the third quarter, and EPS between $0.05 and $0.12.
Photronics operates in a cyclical industry, so ups and downs are to be expected. A solid third quarter could erase Wednesday's losses, but for now investors are punishing the stock.
10 stocks we like better than Photronics
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 tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Photronics 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 May 1, 2017