Why Ichor Stock Skyrocketed Today
Key Points
Ichor's fourth-quarter report arrived with sales and earnings that were better than Wall Street expected.
The company expects sales will grow in a sequential basis in each quarter this year.
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Ichor Holdings (NASDAQ: ICHR) surged higher Tuesday. The fluid-delivery-subsystems company's share price closed out the daily session up 32.7%. Meanwhile, the S&P 500 was down 0.4% and the Nasdaq Composite was down 0.6%.
Ichor published its fourth-quarter earnings report after the market closed yesterday, and performance crushed expectations. The company also issued great forward guidance.
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Ichor surged after topping Q4 sales and earnings expectations
Ichor reported non-GAAP (adjusted) earnings per share of $0.07 for the fourth quarter, far exceeding the average Wall Street analyst estimate of a per-share loss of $0.06. Meanwhile, sales came in at $223.6 million -- beating the average Wall Street target by $2.76 million.
Ichor's revenue was still down 4% year over year, but demand in the semiconductor segment and rising growth in the commercial manufacturing category helped power a big earnings beat. While the company's adjusted gross margin dropped to 11.7% from 12% in the prior-year quarter, management noted that the business was still in the early stages of seeing the benefits of steps taken to boost margins.
What's next for Ichor?
Ichor expects continued strengthening in commercial manufacturing and thinks there's a chance that growth in the category will eclipse the expansion seen in semiconductor sales. Despite the sales decline in Q4, management anticipates that revenue will increase sequentially in each quarter this year.
For the current quarter, Ichor expects that sales will come in between $240 million and $260 million. At the midpoint of the target range, this would mean year-over-year sales growth of roughly 12%. Meanwhile, gross margins are projected to rise to between 12% and 13%. On the strength of strong sales growth and expanding gross margins, the company's target for adjusted earnings per share between $0.08 and $0.16 suggests that earnings will be roughly in line with last year's quarter despite increased spending to drive growth.
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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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