The global semiconductor shortage has created production disruptions in several industries, primarily consumer electronics and electric vehicles (EVs). However, the Biden administration is considering invoking the Defense Production Act (DPA) to identify possible semiconductor chip hoarding and ease bottlenecks that have hindered U.S. car production and caused consumer electronics shortages. Furthermore, a new program, National Semiconductor Economic Roadmap (NSER), introduced by Arizona leaders to focus on improving American infrastructure and supply chains for the semiconductor industry, is projected to propel the growth of chip makers.
While the global chip shortage is expected to persist for some time because of lean inventory and production delays, the initiatives of governments worldwide to create a more secure supply chain should bode well for the industry in the long run.
Axcelis Technologies Inc. (ACLS)
ACLS is engaged in designing, manufacturing, and servicing ion implantation and other processing equipment used in the fabrication of semiconductor chips. The company offers high energy, high current, and medium current implanters for varied application requirements. In addition, it provides used tools, replacement parts, equipment upgrades, maintenance services, and customer training as part of its aftermarket lifecycle goods and services.
This month, ACLS announced shipments of the company’s full family of Purion SiC Power Series implanters to several leading power device chipmakers located in Asia and Europe. The systems will be utilized in high-volume SiC power device manufacture for the automotive, mobile, and IoT sectors.
For the second quarter ended June 30, 2021, ACLS’s revenue increased 19.8% from the year-ago value to $140.16 million. Its operating income grew 46.5% year-over-year to $23.9 million. The company’s net income surged 42.1% from the prior-year quarter to $18.91 million, while its EPS increased 41% from the year-ago value to $0.55.
The company’s EPS is expected to grow 82.2% year-over-year to $2.46 in the current year. In addition, analysts expect ACLS’ revenue to increase 31.8% in fiscal 2021. ACLS’s stock has gained 114% over the past year and 63.7% year-to-date.
ACLS’ POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ACLS is also rated an A grade for Momentum, and a B for Value and Quality. Within the B-rated Semiconductor & Wireless Chip industry, it is ranked #17 of 97 stocks.
To see additional POWR Ratings for Stability, Growth, and Sentiment for ACLS, click here.
Cohu Inc. (COHU)
COHU operates internationally in the semiconductor test and inspection equipment and printed circuit board (PCB) test equipment industry. Additionally, it provides semiconductor and electronics manufacturers and test subcontractors with semiconductor test and inspection handlers, micro-electromechanical system (MEMS) test modules, thermal subsystems, semiconductor automated test equipment, and bare board PCB test systems.
In July, COHU announced that it had prepaid an additional $100 million of its term loan B (TLB) facility. As a result, its outstanding principal on its TLB has been reduced to nearly $104 million, exhibiting strong fundamental performance.
During the second quarter ended June 26, 2021, COHU’s net sales increased 69.9% year-over-year to $244.80 million. The company reported an operating profit of $114.52 million, compared to an operating loss of $528 thousand in the prior-year quarter. Its net income came in at $95.10 million for this period, compared to a net loss of $4.74 million in the second quarter of 2020. Its EPS totaled $1.92, compared to a loss per share of $0.11 in the prior-year period.
The consensus EPS estimate of $3.05 for the current year represents a 156.3% increase year-over-year. The consensus revenue estimate of $902.73 million for the current year represents a 41.9% increase from the same period last year. The stock has gained 83.4% over the past year.
COHU’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. COHU also has an A grade for Growth and Momentum, and a B for Value. In the same industry, it is ranked #42.
Click here to see additional POWR Ratings for Sentiment, Quality, and Stability for COHU.
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ACLS shares were trading at $46.79 per share on Wednesday afternoon, down $0.89 (-1.87%). Year-to-date, ACLS has gained 60.68%, versus a 17.87% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...
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