MKS Instruments (MKSI) Beats on Q1 Earnings and Revenues

Premium scientific & technical instruments company, MKS Instruments, Inc. MKSI reported better-than-expected first-quarter 2017 results. The company noted that this stellar performance has been stemmed by robust semiconductor trade and sound customer relationships.

Over the last one month, shares of this Zacks Rank #2 (Buy) stock yielded a return of 10.40%, outperforming 6.47% growth recorded by the Zacks categorized Electronics - Manufacturing Machinery industry.

Earnings

Quarterly adjusted earnings came in at $1.27 per share, handily beating the Zacks Consensus Estimate of $1.08. The figure also came higher than the year-ago tally of 38 cents per share.

Revenues

Quarterly revenues were $437.2 million, outpacing the Zacks Consensus Estimate of $405 million. Revenues also came higher than the year-ago tally of $183.7 million.

Sales of Products during the quarter came in at $392.9 million, remarkably up from the year-ago number of $153.6 million. Sales of Services during the reported quarter totaled $44.2 million compared to $30.1 million recorded in the year-ago period.

Costs and Margins

Total cost of revenues during the quarter was $231.6 million, up from $105.8 million recorded in the year-ago tally. Selling, general and administrative expenses were $74.2 million, considerably higher than $34 million recorded in the year-ago quarter. Also, research and development expenses came in at $33.3 million, up from $17.2 million incurred in first-quarter 2016.

Gross profit margin during the quarter was 47%, expanding 490 basis points (bps) year over year. Adjusted operating margin in the reported quarter was 22.5%, up 790 basis points year over year.

Balance Sheet

Exiting the first quarter, MKS Instruments had cash and cash equivalents of $255.9 million, up from $228.6 million recorded at the end of 2016. Long-term debt came in at $552.2 million, down from $601.2 million recorded on Dec 31, 2016.

During the quarter, the company paid quarterly dividends of $9.4 million, 3% higher than the dividend paid in fourth-quarter 2016.

Notably, during the reported quarter, the company voluntarily paid back its term loan worth $50 million. The move was in sync with the ongoing strategy to strengthen balance sheet and lower interest expense.

Outlook

In Apr 2017, MKS Instruments completed the divestiture of its Data Analytics Solutions Business Unit. The company anticipates to accrue post-tax gain of roughly $72 million from the deal in second-quarter 2017.

Based on the current market conditions, the company anticipates to generate revenues within the range of $440–$480 million in second-quarter 2017. Adjusted earnings are projected to lie in the band of $1.26–$1.50 per share in the next quarter.

Other Stocks to Consider

Some other stocks worth considering in the same industry are listed below:

Applied Optoelectronics, Inc. AAOI has an outstanding positive average earnings surprise of 116.49% for the trailing four quarters and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Adobe Systems Incorporated ADBE presently holds a Zacks Rank #2 and has a positive average earnings surprise of 7.71% for the past four quarters.  

Applied Materials, Inc. AMAT, which also carries a Zacks Rank #2, generated a positive average earnings surprise of 3.92% over the last four quarters.  

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