In terms of outlook, PLAB expects earnings of $205 million to $215 million and earnings per share of 38 cents to 48 cents for the quarter. The midpoint of $210 million and 43 cents per share is below consensus expectations of $214 million and 47 cents per share, respectively, suggesting earnings are down about 12% from the second quarter of 2022. However, this is actually in line with my previous expectations for strong margins. The company began declining last year as demand and prices for photomasks began to decline as inflation and rising interest rates slowed economic growth. Still, PLAB is likely taking a cautious view due to limited visibility, which in part reflects backlogs that are typically only one to three weeks long, but this guidance The top-line growth of around 3% shown in indicates that demand is stable.
In addition, PLAB’s solid operating results at the beginning of the year generated an additional $27.7 million of operating cash flow during the last quarter. Combined with foreign currency earnings on an existing cash balance of $27.5 million, this will allow the company to invest his $31.1 million in growth investments through capital expenditures, further increasing his net cash balance by $24 million to $340.10 million. I was able to make a million dollars. The latter is currently worth a whopping $5.53 per share, or about a third of PLAB’s current stock price. If it believes this surplus funding will allow the company to continue to invest aggressively in improving its operations, PLAB will be able to capitalize on the demand for photomasks created by the systematic slowdown in global economic activity by central banks around the world. I think we are in a position to weather the cyclical softening. And ultimately, we’ll be able to make the most of any long-term long-term tailwinds that we still have. This includes a growing number of applications across the consumer, commercial and industrial spectrums, and semiconductors are likely to continue to make inroads in the coming years. If so, the stock, which has already recovered about half of the ground it initially lost in this quarter’s news, should continue to move higher.
Julius Juenemann is an equity analyst at the CFA Forbes Special Situation Survey and forbes investor Investment newsletter. Phototronics (PLAB) is forbes investorTo access this and other stocks recommended, forbes investorclick here to subscribe.
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