Bull of the Day: Photronics (PLAB)

Photronics (PLAB - Snapshot Report) has beaten the Zacks Consensus Estimate in each of the last four quarters. On top of that beats, analysts have also been increasing estimates. Positive estimate revisions has helped push the stock to a Zacks Rank #1 (Strong Buy) and today it is the Bull of the Day.

Increase In Leverage

The most recent quarter saw the company a big improvement in its margin profile. Gross margins improved to 31.5% in the quarter, a big move from the 21.4% level we saw in the year ago period. Operating margin expanded to 19.2% compared to the 7.5% seen in the year-ago period.

DescriptionThe most recent quarter saw the company a big improvement in its margin profile. Gross margins improved to 31.5% in the quarter, a big move from the 21.4% level we saw in the year ago period. Operating margin expanded to 19.2% compared to the 7.5% seen in the year-ago period.

Photronics makes and sells photomasks which are high precision photographic quartz plates containing microscopic images of electronic circuits. It offers photomasks for the use in the manufacture of semiconductors and flat panel displays (FPDs), as well as for use as masters to transfer circuit patterns onto semiconductor wafers and flat panel substrates during the fabrication of integrated circuits. Photronics was founded in 1969 and is headquartered in Brookfield, Connecticut.

Earnings History

When I saw the last four quarters I thought to myself “how odd” – but oddly satisfying. Let me list out the last four quarters beats starting with the Jan 2015 quarter. That quarter was a beat of $0.01, then a beat of $0.03. The July quarter was a beat of $0.05 and the most recent beat, well it was the next odd number in the sequence, $0.07.

Sometimes odd is a good thing.

The positive earnings surprise percentages were 16%, 27%, 41% and 39%. Maybe even more importantly, the last two quarters have seen the company post beats on the topline too.

Estimates

With the most recent earnings beat and guidance increase, we see the 2015 Zacks Consensus Estimate move from $0.75 to $0.84. That is nice and all, but this is December and there is only one more quarter to be reported and only a few weeks left in that quarter.

Instead, let’s focus on the 2016 numbers… and its best to show this in graph.

Prior Bull Of The Day

This stock is one that many at Zacks have liked over the last year or so. This is the third time this year that PLAB has been a bull of the day, so clearly, they are doing something right.

Other recent Bull Of the Day articles can be found in the archives.

Chart

Zacks has developed a chart that helps investors see how earnings estimates have impacted the price of the stock over the last several years. We call this chart the price and consensus chart, and each color coded lines represents analyst estimates over a designated year. As estimates increase, the stock tends to follow. The Zacks Rank is impacted by earnings estimate increases, beats and incorporates the idea of analyst agreement and magnitude. As a Zacks Rank #1 (Strong Buy) we see that estimates are moving higher.

by Brian Bolan

- Source: http://www.zacks.com/commentary/65263/bull-of-the-day-photronics-plab#sthash.u40Y5Yzd.dpuf