Why Diodes Stock Is Skyrocketing Today
Key Points
Diodes' Q4 sales and earnings results beat the market's expectations.
Diodes is forecasting strong sales growth and improving gross margins over the next three years.
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Diodes (NASDAQ: DIOD) stock is roaring higher on Wednesday following the publication of the company's fourth-quarter results. The company's share price was up 27.4% as of 3:30 p.m. ET.
Diodes published its Q4 results after yesterday's market close, posting sales and earnings that handily topped Wall Street's forecasts. In addition to the Q4 beats, the company issued strong forward guidance and set three-year performance targets.
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Diodes stock surges on strong Q4 print
With its Q4 report, Diodes delivered non-GAAP (adjusted) earnings per share of $0.34 on sales of $391.58 million. For comparison, the average analyst estimate had called for the business to post an adjusted per-share profit of $0.27 and sales of $380.03 million. Adjusted earnings per share were up roughly 26% year over year, and revenue was up approximately 15%. Demand for artificial intelligence (AI) servers helped power 25% year over year growth for the computing business, and the company also saw double-digit sales gains in the automotive and industrial end markets.
What's next for Diodes?
Diodes is targeting first-quarter revenue of roughly $395 million -- good for year-over-year growth of roughly 19%. Meanwhile, the business is targeting a gross margin of roughly 31.5% -- in line with the margin in last year's quarter.
In addition to guidance for the current quarter, management laid out targets for the next three-year period. The company expects that it will be able to reach $2 billion in annual revenue at the end of the forecast period. For comparison, the business recorded revenue of $1.48 billion last year. Even better, management expects the business will have reached a gross margin of more than 35% -- up from a margin of 31% last year. With improving margins and signs that sales growth is poised to accelerate in the near term, investors are pouring into Diodes stock today.
Should you buy stock in Diodes right now?
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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