company background image
IPGP

IPG Photonics NasdaqGS:IPGP Stock Report

Last Price

US$105.18

Market Cap

US$5.3b

7D

3.3%

1Y

-37.8%

Updated

13 Aug, 2022

Data

Company Financials +
IPGP fundamental analysis
Snowflake Score
Valuation1/6
Future Growth1/6
Past Performance3/6
Financial Health6/6
Dividends0/6

IPGP Stock Overview

IPG Photonics Corporation develops, manufactures, and sells various high-performance fiber lasers, fiber amplifiers, and diode lasers used in various applications primarily in materials processing worldwide.

Rewards

Earnings are forecast to grow 12.43% per year

Risk Analysis

IPGP passed our risk checks.

IPG Photonics Competitors

Price History & Performance

Summary of all time highs, changes and price drops for IPG Photonics
Historical stock prices
Current Share PriceUS$105.18
52 Week HighUS$180.54
52 Week LowUS$82.68
Beta1.35
1 Month Change14.13%
3 Month Change6.89%
1 Year Change-37.81%
3 Year Change-11.92%
5 Year Change-36.60%
Change since IPO310.86%

Recent News & Updates

Aug 08

IPG Photonics Corporation: More Downside Is Possible

IPGP’s latest earnings report was arguably better than expected, although IPGP paid a heavy price to achieve it, literally and figuratively. Multiples for IPGP are lower than they have been, but they could go lower with the income and balance sheet set to worsen. The stock is much closer to resistance than it is to support, which favors sideways action or even a move down with the way the charts are laid out. There is trouble looming ahead for IPGP, which suggests long at this point in time is probably not the way to go. IPG Photonics Corporation (IPGP) has released its latest report. Earnings fell as expected with IPGP facing several headwinds, but the report also included enough positives to counter the negatives. The first reaction to the report was positive with the stock jumping higher. However, the initial momentum could not be sustained and the stock turned south. There are still a number of roadblocks standing in the way of IPGP, making long IPGP a more questionable proposition than it otherwise would be. Why will be covered next. Earnings are under pressure at IPGP The top line was better than expected in the latest report with IPGP surpassing consensus estimates and the midpoint of its own guidance. On the other hand, IPGP missed consensus estimates for the bottom line. Q2 revenue increased by 1.4% YoY to $377M and EPS declined by 14.7% YoY to $1.10. Book-to-bill was below one. The table below shows the numbers for Q2 FY2022. Gross margin declined with costs of goods going up, including as a result of the need for higher inventories to guard against supply chain disruptions, less absorption of manufacturing costs and increased shipping costs and tariffs. However, the earnings decline was mostly due to a drop in operating margins, which was powered by an increase in operating expenses. The increase in opex was mostly the result of a $18M loss due to foreign exchange rates. Forex reduced operating income by $18M, operating margin by 470 basis points and EPS by $0.23 in Q2. The impact was partially offset by a lower-than-expected tax rate of 22% instead of the expected 26% and a 13% or $4.6M reduction in spending on research and development or R&D. In addition, EPS got a boost from share buybacks. The weighted-average share count was 51.8M in Q2 FY2022, down from 54M in Q2 FY2021. IPGP spent $233M on buybacks in Q2 after spending $79M in Q1. Buybacks are expected to continue with IPGP authorizing a new $300M program. Buybacks had a negative impact on the balance sheet with cash and equivalent falling to $1,234.7M at the end of Q2, down from $1,514.4M at the start of FY2022. Another notable change on the balance sheet was the increase in inventories to $557M in Q2, up from $461M at the start of the year. All in all, the Q2 report was a mix of some good and some not so good. On the one hand, earnings were better than the headline number suggest it was once forex is accounted for. On the other hand, while stock buybacks and reduced R&D spending helped prop up earnings, some may feel buybacks and decreased R&D spending is not really beneficial to IPGP in the long run. (GAAP) Q2 FY2022 Q1 FY2022 Q2 FY2021 QoQ YoY Revenue $377.023M $369.979M $371.658M 1.90% 1.44% Gross margin 45.7% 46.4% 48.6% (70bps) (290bps) Operating margin 19.0% 25.2% 24.8% (620bps) (580bps) Operating expenses $100.669M $78.678M $88.276M 27.95% 14.04% Operating income $71.675M $93.143M $92.252M (23.05%) (22.31%) Net income (attributable to IPGP) $56.968M $69.572M $69.800M (18.12%) (18.38%) EPS $1.10 $1.31 $1.29 16.03% (14.73%) Source: IPGP Form 8-K The report contained several positive developments worth noting. Sales of emerging growth products continued to outperform, particularly those related to electrical vehicles. If IPGP is to turn it around, new growth drivers will be needed to take the place of old ones. If new products from IPGP get a positive reaction, that’s a good sign for the future. IPGP is also having success in reducing its exposure to China. China used to be IPGP’s main growth driver, but recent struggles have negatively affected IPGP. IPGP is seeking to reduce its reliance and there seems to be progress. Non-China sales accounting for 64% of the total in Q2 FY2022, up from 57% a year ago. Sales declined by 14% YoY in China, but it was partially offset by an increase of 33% in North America and 43% in Japan. Europe grew by 2% in Q2, but that’s down from 27% in Q1. Guidance calls for Q3 revenue of $350-380M, a decline of 3.2% QoQ and 3.7% YoY at the midpoint. The forecast expects EPS of $1.00-1.30, a decline of 17.9% YoY at the midpoint. It’s also expected to increase by $0.05 QoQ, but that’s with a $14-16M sequential decrease in operating expenses. Keep in mind that IPGP is expected to be busy with share buybacks in Q3. (GAAP) Q3 FY2022 (guidance) Q3 FY2021 YoY (midpoint) Revenue $350-380M $379.2M (3.74%) Gross margin 44-46% 49% (400bps) Operating expenses $85-87M $83.9M 2.50% EPS $1.00-1.30 $1.40 (17.86%) Earnings are likely to remain under pressure with IPGP needing to make internal changes in the coming quarters, especially as it relates to Russia due to recent events. From the Q2 earnings call: “IPG stopped all new investments in Russia and prepared plans to increase manufacturing of critical components in the United States and Western Europe in order to reduce our reliance on manufacturing capacity in Russia. We continue to make progress with hiring additional employees, allocating workspace for increased production and running second and even third shifts in certain locations. Our inventories of critical components increased and further lowered our risks of supply chain disruptions. We qualified some third-party suppliers and are now placing orders for some of these components. In the second quarter, we started setting up infrastructure for production increases in Germany, Italy and United States.” A transcript of the Q2 FY2022 earnings call can be found here. IPGP will seek various mitigation efforts, but the spillover effect is that margins are likely to decline with IPGP transitioning from Russia with its lower costs to places like Europe and the U.S. with their higher costs. IPGP’s large exposure to Europe could be a problem with local manufacturing set to become more expensive, especially due to the higher cost of energy in Europe. IPGP is trading at a discount IPGP earned $2.41 in H1 and estimates expect IPGP to finish with EPS of $4.49-4.91 in FY2022, less than the $5.16 in FY2021. IPGP trades at 22 times forward earnings with a trailing P/E of 21. In comparison, the 5-year averages are 34x and 41x respectively. IPGP is cheaper than it has been in the past, which some might see as a buying opportunity. On the other hand, lower multiples are justified with IPGP not growing as it did before. The table below shows the multiples for IPGP. Keep in mind that share buybacks are propping up earnings at the moment, but the current pace of share buybacks is unlikely to continue. IPGP already used up $312M of its cash reserves in the first half, leaving it with a cash balance of $1.2B. Enterprise value at $4B is still way lower than market cap at $5.2B, but the gap is shrinking along with the cash balance. Forward multiples are higher than trailing ones with earnings projected to decline. IPGP Market cap $5.19B Enterprise value $3.99B Revenue ("ttm") $1,490.6M EBITDA $448.1M Trailing P/E 20.59 Forward P/E 21.63 PEG 0.95 P/S 3.66 P/B 1.87 EV/sales 2.68 Trailing EV/EBITDA 8.91 Forward EV/EBITDA 9.22 Source: Seeking Alpha The stock is up against resistance The stock rose after the Q2 report, but ended the day down. The stock was in the process of moving past resistance in the $105 region, but the response to the Q2 report pushed the stock below resistance. The chart below shows how the stock was able to find support in the $105 region when it was trading above it earlier in the year.

Aug 03
When Should You Buy IPG Photonics Corporation (NASDAQ:IPGP)?

When Should You Buy IPG Photonics Corporation (NASDAQ:IPGP)?

IPG Photonics Corporation ( NASDAQ:IPGP ), might not be a large cap stock, but it led the NASDAQGS gainers with a...

Shareholder Returns

IPGPUS ElectronicUS Market
7D3.3%2.3%3.2%
1Y-37.8%-12.2%-10.2%

Return vs Industry: IPGP underperformed the US Electronic industry which returned -12.2% over the past year.

Return vs Market: IPGP underperformed the US Market which returned -10.1% over the past year.

Price Volatility

Is IPGP's price volatile compared to industry and market?
IPGP volatility
IPGP Average Weekly Movement6.3%
Electronic Industry Average Movement7.5%
Market Average Movement7.7%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: IPGP is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: IPGP's weekly volatility (6%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19906,580Eugene Scherbakovhttps://www.ipgphotonics.com

IPG Photonics Corporation develops, manufactures, and sells various high-performance fiber lasers, fiber amplifiers, and diode lasers used in various applications primarily in materials processing worldwide. The company's laser products include hybrid fiber-solid state lasers with green and ultraviolet wavelengths; fiber pigtailed packaged diodes and fiber coupled direct diode laser systems; high-energy pulsed lasers, multi-wavelength and tunable lasers, and single-polarization and single-frequency lasers; and high-power optical fiber delivery cables, fiber couplers, beam switches, chillers, scanners, and other accessories. It also provides erbium-doped fiber and Raman amplifiers, and integrated communications systems, which are deployed in broadband networks; and ytterbium and thulium specialty fiber amplifiers and broadband light sources.

IPG Photonics Fundamentals Summary

How do IPG Photonics's earnings and revenue compare to its market cap?
IPGP fundamental statistics
Market CapUS$5.28b
Earnings (TTM)US$267.03m
Revenue (TTM)US$1.49b

19.8x

P/E Ratio

3.5x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
IPGP income statement (TTM)
RevenueUS$1.49b
Cost of RevenueUS$794.58m
Gross ProfitUS$696.04m
Other ExpensesUS$429.02m
EarningsUS$267.03m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)5.32
Gross Margin46.69%
Net Profit Margin17.91%
Debt/Equity Ratio1.2%

How did IPGP perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is IPGP undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

1/6

Valuation Score 1/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for IPGP?

Other financial metrics that can be useful for relative valuation.

IPGP key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue2.7x
Enterprise Value/EBITDA9.1x
PEG Ratio1.6x

Price to Earnings Ratio vs Peers

How does IPGP's PE Ratio compare to its peers?

IPGP PE Ratio vs Peers
The above table shows the PE ratio for IPGP vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average15.2x
FN Fabrinet
19.8xn/aUS$3.7b
JBL Jabil
10x2.5%US$8.6b
FLEX Flex
9.4x3.9%US$8.6b
PLXS Plexus
21.6x19.6%US$2.6b
IPGP IPG Photonics
19.8x12.4%US$5.3b

Price-To-Earnings vs Peers: IPGP is expensive based on its Price-To-Earnings Ratio (19.8x) compared to the peer average (15.2x).


Price to Earnings Ratio vs Industry

How does IPGP's PE Ratio compare vs other companies in the US Electronic Industry?

Price-To-Earnings vs Industry: IPGP is expensive based on its Price-To-Earnings Ratio (19.8x) compared to the US Electronic industry average (15.8x)


Price to Earnings Ratio vs Fair Ratio

What is IPGP's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

IPGP PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio19.8x
Fair PE Ratio22x

Price-To-Earnings vs Fair Ratio: IPGP is good value based on its Price-To-Earnings Ratio (19.8x) compared to the estimated Fair Price-To-Earnings Ratio (22x).


Share Price vs Fair Value

What is the Fair Price of IPGP when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: IPGP ($105.18) is trading above our estimate of fair value ($70.95)

Significantly Below Fair Value: IPGP is trading above our estimate of fair value.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.


Discover undervalued companies

Future Growth

How is IPG Photonics forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


12.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: IPGP's forecast earnings growth (12.4% per year) is above the savings rate (1.9%).

Earnings vs Market: IPGP's earnings (12.4% per year) are forecast to grow slower than the US market (14.4% per year).

High Growth Earnings: IPGP's earnings are forecast to grow, but not significantly.

Revenue vs Market: IPGP's revenue (7% per year) is forecast to grow slower than the US market (7.9% per year).

High Growth Revenue: IPGP's revenue (7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: IPGP's Return on Equity is forecast to be low in 3 years time (9%).


Discover growth companies

Past Performance

How has IPG Photonics performed over the past 5 years?

Past Performance Score

3/6

Past Performance Score 3/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-13.1%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: IPGP has high quality earnings.

Growing Profit Margin: IPGP's current net profit margins (17.9%) are higher than last year (16.2%).


Past Earnings Growth Analysis

Earnings Trend: IPGP's earnings have declined by 13.1% per year over the past 5 years.

Accelerating Growth: IPGP's earnings growth over the past year (19.8%) exceeds its 5-year average (-13.1% per year).

Earnings vs Industry: IPGP earnings growth over the past year (19.8%) underperformed the Electronic industry 26.1%.


Return on Equity

High ROE: IPGP's Return on Equity (10.1%) is considered low.


Discover strong past performing companies

Financial Health

How is IPG Photonics's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: IPGP's short term assets ($2.2B) exceed its short term liabilities ($315.9M).

Long Term Liabilities: IPGP's short term assets ($2.2B) exceed its long term liabilities ($92.5M).


Debt to Equity History and Analysis

Debt Level: IPGP has more cash than its total debt.

Reducing Debt: IPGP's debt to equity ratio has reduced from 1.3% to 1.2% over the past 5 years.

Debt Coverage: IPGP's debt is well covered by operating cash flow (874.1%).

Interest Coverage: IPGP earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet


Discover healthy companies

Dividend

What is IPG Photonics's current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate IPGP's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate IPGP's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if IPGP's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if IPGP's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as IPGP has not reported any payouts.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

9.4yrs

Average management tenure


CEO

Eugene Scherbakov (74 yo)

1.25yrs

Tenure

US$7,284,851

Compensation

Dr. Eugene A. Scherbakov, Ph D., has been a Director of IPG Photonics Corporation since September 2000 and serves as Chief Executive Officer since May 4, 2021. He served as the Chief Operating Officer of I...


CEO Compensation Analysis

Compensation vs Market: Eugene's total compensation ($USD7.28M) is about average for companies of similar size in the US market ($USD8.19M).

Compensation vs Earnings: Eugene's compensation has increased by more than 20% in the past year.


Leadership Team

Experienced Management: IPGP's management team is seasoned and experienced (9.4 years average tenure).


Board Members

Experienced Board: IPGP's board of directors are considered experienced (5.9 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: IPGP insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

IPG Photonics Corporation's employee growth, exchange listings and data sources


Key Information

  • Name: IPG Photonics Corporation
  • Ticker: IPGP
  • Exchange: NasdaqGS
  • Founded: 1990
  • Industry: Electronic Manufacturing Services
  • Sector: Tech
  • Implied Market Cap: US$5.281b
  • Shares outstanding: 50.21m
  • Website: https://www.ipgphotonics.com

Number of Employees


Location

  • IPG Photonics Corporation
  • 50 Old Webster Road
  • Oxford
  • Massachusetts
  • 1540
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/13 00:00
End of Day Share Price2022/08/12 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.