MKS Instruments (NasdaqGS:MKSI) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

MKS Instruments, Inc. (NasdaqGS:MKSI) is scheduled to report Q3 earnings results after markets close for trading on October 27, 2020.

The company is expected to report earnings of $1.78/share on revenue of $561.3 million. The consensus earnings per share (EPS) of $1.78/share is based on a poll of 11 analysts and represents a growth in eps of 58.5% over the same quarter last year, when the company reported earnings of $1.12/share.

The revenue forecast of $561.3 million based on a poll of 10 analysts implies a year-over-year (YoY) growth in revenue of 21.4%. Last year the company reported $462.5 million in revenue for the quarter.

Expected to report EPS growth of 58.5% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $561.25 $462.45 21.4%
EPS $1.78 $1.12 58.5%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and met expectations 1 quarter.

What are your expectations from MKS Instruments, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.18 $1.62 36.9% Beat
Q1, 2020 $1.24 $1.54 24.6% Beat
Q4, 2019 $1.07 $1.20 11.7% Beat
Q3, 2019 $0.87 $1.12 29.1% Beat
Q2, 2019 $1.10 $1.09 −0.8% Missed
Q1, 2019 $1.07 $1.12 4.6% Beat
Q4, 2018 $1.51 $1.54 2.3% Beat
Q3, 2018 $1.72 $1.88 9.5% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 4.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $121.65 $126.56 4.0% Increase
April 28, 2020 $96.08 $107.95 12.4% Increase
January 28, 2020 $108.63 $110.21 1.5% Increase
October 23, 2019 $95.86 $109.49 14.2% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.46, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.46 implies a 0.7% chance of earnings manipulation.

Fundamentals And Technical Analysis

MKS Instruments, Inc. is currently trading at $113.52/share, down −0.6% for the day. The company is trading at approximately 87.3% of its 52-week high of $129.97/share. The company’s stock price is down −10.3% since the last earnings report and down −2.9% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 47.77 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:MKSI Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 26.86 and a forward P/E multiple of 17.19.

MKS Instruments, Inc.’s current share price also implies a price-to-book (P/B) multiple of 2.94. The following table summarizes some other key fundamental ratios:

Data as of October 21, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $113.52
P/E Ratio 26.9x
P/E Ratio (Fwd) 17.2x
PEG Ratio 3.5
Total Debt / Total Capital 14.0%
Levered Free Cash Flow $285.2 million
EV / EBITDA 14.9x

Finbox

MKS Instruments, Inc. is a mid-cap stock with a market capitalization of $6.258 billion and a total enterprise value of $6.675 billion. The company operates in the Information Technology sector and the Semiconductors & Semiconductor Equipment industry.

MKS Instruments, Inc. provides instruments, systems, subsystems, and process control solutions that measure, monitor, deliver, analyze, power, and control critical parameters of manufacturing processes worldwide. Its Vacuum & Analysis segment offers pressure and vacuum control solutions, including direct and indirect pressure measurement; materials delivery solutions comprising flow and valve technologies, as well as integrated pressure measurement and control subsystems, which provide customers with precise control capabilities; power delivery products, such as microwave, power delivery systems, radio frequency matching networks, and metrology products used in providing energy to etching, stripping, and deposition processes; and plasma and reactive gas products. The company’s Light & Motion segment offers lasers and laser-based systems, such as amplifiers, fiber lasers, diode-pumped solid-state lasers, high-energy pulsed lasers, and tunable lasers; and photonics products comprising optical components, lens assemblies, and vibration isolation solutions, as well as instruments and motion products, such as high-precision motion stages and controls, hexapods, photonics instruments for measurement and analysis, and production equipment for test and measurement. Its Equipment & Solutions segment provides laser-based systems for printed circuit board (PCB) manufacturing, including flexible interconnect PCB processing systems and HDI solutions for rigid PCB manufacturing and substrate processing, as well as passive component MLCC testing. The company serves semiconductor, industrial technologies, life and health sciences, research, and defense markets. It markets and sells its products and services through its direct sales organization, independent distributors, and sales representatives, as well as through its websites and product catalogs. MKS Instruments, Inc. was founded in 1961 and is headquartered in Andover, Massachusetts.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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