Axcelis Technologies (ACLS) Margin Compression Tests Bullish Silicon Carbide Growth Narrative

Axcelis Technologies (ACLS) just wrapped up FY 2025 with Q4 revenue of US$238.3 million and basic EPS of US$1.11, alongside trailing twelve month revenue of US$839.0 million and EPS of US$3.81 that frame the latest quarter in a fuller earnings picture. Over recent periods, the company has seen quarterly revenue range from US$192.6 million to US$238.3 million and quarterly EPS move between US$0.83 and US$1.11. During the same time, trailing twelve month revenue moved from US$958.1 million to US$839.0 million and EPS shifted from US$5.48 to US$3.81. For investors, the key focus this season is how these headline numbers feed into a story of tightening margins and what that might mean for the sustainability of current profitability.

See our full analysis for Axcelis Technologies.

With the latest figures on the table, the next step is to see how they line up against the main narratives around Axcelis, highlighting where the numbers confirm the story and where they push back against it.

See what the community is saying about Axcelis Technologies

Margins Under Pressure On Trailing Basis

• Over the last 12 months, Axcelis generated trailing revenue of US$839.0 million with a net profit of US$120.2 million, which equates to a 14.3% net margin compared with 19.7% a year earlier.
• Analysts' consensus view highlights Axcelis as a leader in high energy ion implantation and silicon carbide tools. However, the drop in trailing margin to 14.3% raises questions about how quickly that technology edge feeds into profitability.
  • Consensus points to a growing installed base and higher margin services as long term supports. At the same time, the margin shift in the trailing data shows that near term earnings power has been tighter than the earlier five year earnings growth rate of 15.7% per year might suggest.
  • Heavy China exposure in the consensus narrative sits alongside these margin figures, so any change in regional demand or export rules could directly affect how that 14.3% margin trends relative to the earlier 19.7% level.

Valuation Discount Versus Peers

• The stock trades on a trailing P/E of 20.9x, compared with 42.3x for the broader US semiconductor industry and 55.7x for peers. A DCF fair value of US$35.98 in the dataset is well below the current share price of US$82.01.
• Consensus narrative talks up long term growth drivers such as silicon carbide adoption and data center power needs, and the lower P/E alongside the DCF gap creates a clear tension in how investors frame Axcelis today.
  • Supporters can point to the P/E discount relative to industry and peers as aligning with the idea that Axcelis' high energy tools and recurring service revenue are not fully reflected, even after taking into account modest trailing revenue growth of 3.8% per year.
  • On the other hand, critics can highlight the DCF fair value of US$35.98 versus the US$82.01 share price and the 14.3% trailing margin to argue that the current multiple already bakes in a lot of the long term silicon carbide and power device potential described in the consensus narrative.

Forecast Earnings Decline Versus High Quality Past

• Over the past five years, earnings grew 15.7% per year and are described as high quality. Analysts in the dataset expect earnings to decline about 8.7% per year over the next three years, with revenue forecast to contract 2.3% annually and profit margins moving from 17.7% to 8%.
• Bears argue that heavy China concentration and slower adoption of advanced silicon carbide designs could hold back growth, and the shift from strong historical expansion to the forecast 8.7% annual earnings decline lines up closely with those concerns.
  • Forecast earnings of US$66.7 million by around 2028, down from US$158.5 million in the dataset, along with an expected margin move to 8%, directly reflects worries about muted demand and competition from local Chinese toolmakers in Axcelis' largest market.
  • The same forecasts assume Axcelis would trade on a 48x P/E in 2028 to justify a price target of US$92.00. This is a higher multiple than the current US semiconductor industry P/E of 28.6x and underlines how much bears think would need to go right despite the projected earnings decline.

On these numbers, skeptics see plenty to unpack in Axcelis' China exposure and earnings decline forecasts, so it can be helpful to read the more cautious take in full: 🐻 Axcelis Technologies Bear Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Axcelis Technologies on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

With sentiment mixed across earnings quality, margins and China exposure, it is worth moving quickly to check the details yourself and decide where you stand. You can start with 1 key reward and 2 important warning signs.

See What Else Is Out There

Axcelis is facing pressure on margins, forecasts that point to earnings and revenue declines, and a valuation debate that leaves limited room for error.

If that mix of margin compression and an uncertain earnings outlook feels uncomfortable, you may want to shift your focus toward 80 resilient stocks with low risk scores that prioritise more resilient business profiles and potentially steadier performance.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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