Why Is Entegris (ENTG) Stock Soaring Today
What Happened:
Shares of semiconductor materials supplier Entegris (NASDAQ:ENTG) jumped 6.3% in the morning session after the company reported fourth-quarter results, with revenue and EPS beating analysts' expectations. On the other hand, both its revenue and EPS guidance for the next quarter missed consensus estimates, and its operating margin decreased. Moving on, the company provided some encouraging comments on the demand outlook, adding, "As we enter 2024, inventories of semiconductors have largely normalized, end demand has stabilized in most segments, and we expect a gradual industry recovery to occur throughout the year. In addition, we expect Entegris will continue to outgrow the market and show leverage in our model." Zooming out, this was a mixed quarter, considering the underwhelming guidance. However, given some of the poor earnings results from other semis companies this season, these results may be good enough and better-than-feared.
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What is the market telling us:
Entegris's shares are very volatile and over the last year have had 11 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 9 months ago, when the stock gained 8.2% on the news that the company reported first-quarter revenue, operating income, and free cash flow that surpassed analysts' expectations. Inventory levels rose, with management adding that "2023 continues to be an uncertain year for the semiconductor industry." Despite this, earnings per share (EPS) also came in strong, beating estimates by a robust 25%. Revenue guidance for the next quarter exceeded Consensus, while the EPS guidance was in line.
As a reminder, management had suggested some sequential decline in Q2 on the Q4 call, so these results are likely a positive surprise for investors. In addition, management provided some updates on the recent sale of the Electronic Chemicals and QED business and hoped to realize $800 million. Earlier, Entegris announced the sale of the Electronic Chemicals business to Fujifilm for $700m. These actions mark important milestones in the company's path towards optimizing the product portfolio for long-term strategic value and to reduce leverage. The market seems to be cheering the results, guidance, and strategic actions.
Entegris is up 14.7% since the beginning of the year. Investors who bought $1,000 worth of Entegris's shares 5 years ago would now be looking at an investment worth $3,823.
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