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Advanced Energy (AEIS)
NASDAQ:AEIS
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Advanced Energy
(NASDAQ:AEIS)
64Neutral
Positive Factors
Earnings Per Share Growth
AE is expected to grow EPS at a 25% CAGR over the next three years, significantly outpacing most equipment peers.
Gross Margin Improvement
GAAP gross margins increased to 37.2% supported by higher volumes and manufacturing efficiencies.
Semiconductor and Data Center Sales
Advanced Energy posted upside results driven by strong Semiconductor and Data Center Sales.
Negative Factors
Industrial and Medical Sales
Industrial and Medical sales were down 29% year-over-year and flat sequentially, as customers work down excess inventories.
Inventory Challenges in Industrial Sector
Industrial and Telecom sectors are still facing challenges due to ongoing inventory digestion, delaying full recovery until the second half of 2025.
Wafer Fabrication Equipment Dependency
Semiconductors, which account for a significant portion of sales, remain largely dependent on the overall wafer fabrication equipment environment, which is expected to remain flat.
Advanced Energy (AEIS) vs. S&P 500 (SPY)
Market Cap
$3.97B
Dividend Yield0.38%
Average Volume (3M)346.70K
Price to Earnings (P/E)73.5
Beta (1Y)1.80
Revenue Growth-10.49%
EPS Growth-57.78%
CountryUS
Employees10,000
SectorIndustrials
Sector Strength70
IndustryElectrical Equipment & Parts
Share Statistics
EPS (TTM)1.43
Shares Outstanding37,721,672
10 Day Avg. Volume282,328
30 Day Avg. Volume346,696
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.68
Price to Cash Flow (P/CF)12.00
P/FCF Ratio13.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$131.89Price Target Upside23.07% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
Advanced Energy Business Overview & Revenue Model
Company DescriptionAdvanced Energy Industries, Inc. designs, manufactures, sells, and supports precision power conversion, measurement, and control solutions worldwide. It offers plasma power solutions, including direct current (DC), pulsed DC, low frequency alternating current, high voltage, and radio frequency (RF) power supplies, as well as RF power supplies, RF matching networks, and RF instrumentation products; and remote plasma sources for reactive gas applications. The company also provides power control modules and thermal instrumentation products for rapid thermal processing, chemical vapor deposition, epitaxy, crystal growing, and chemical processing, as well as metal, carbon fiber, and glass manufacturing and other industrial power applications; high voltage DC-DC products for semiconductor wafer processing and metrology, electrostatic clamping of substrates, scientific instrumentation, mass spectrometry, and X-ray systems for industrial and analytical applications; and low voltage DC-DC board mounted solutions for use in healthcare, telecommunications, test and measurement, instrumentation, and industrial equipment applications, as well as distributed power in server and storage systems. In addition, it offers gas sensing and monitoring products for the energy market, air quality monitoring, and automobile emission monitoring and testing; and embedded power products for medical equipment or IEC 60950-1 for information technology equipment. Further, it offers conversions, upgrades, and refurbishments and used equipment to companies, as well as repair services. The company provides its products through a direct sales force, independent sales representatives, channel partners, and distributors. Advanced Energy Industries, Inc. was incorporated in 1981 and is headquartered in Denver, Colorado.
How the Company Makes MoneyAdvanced Energy Industries generates revenue through the sale of its advanced power conversion and control products to a diverse range of industries, with a significant focus on the semiconductor manufacturing sector. The company benefits from long-term relationships with leading semiconductor equipment manufacturers, who rely on AEIS's products for their high-performance and reliability. Additionally, AEIS has expanded its reach into the industrial and medical sectors, offering tailored solutions that cater to the specific needs of these industries. The company's revenue model is primarily based on direct product sales, but it also involves service and maintenance contracts that provide a steady stream of income. Strategic partnerships and collaborations with key industry players further enhance AEIS's market presence and contribute to its earnings.
Advanced Energy Financial Statement Overview
Summary
Advanced Energy's financial statements reveal a company navigating through revenue contraction and margin pressures, yet maintaining a robust balance sheet with low leverage. Cash flow generation, albeit declining, remains positive, allowing the company to sustain operations and invest in growth opportunities. The financial health is stable, but attention should be paid to reversing revenue and margin declines.Income Statement
The company has shown a decline in total revenue over recent years, with a significant drop from $1.84 billion in 2022 to $1.48 billion in 2024. The Gross Profit Margin in 2024 was approximately 35.7%, and the Net Profit Margin was 3.7%. Both metrics indicate a narrowing of margins, potentially reflecting increased cost pressures or decreased pricing power. EBIT and EBITDA margins have also decreased, highlighting reduced operational efficiency.65
Positive
Balance Sheet
The company's balance sheet is relatively strong, with a low Debt-to-Equity Ratio of 0.09 in 2024, indicating low leverage. The Return on Equity (ROE) has decreased to 4.5% in 2024, reflecting lower profitability. The Equity Ratio stands at 53.2%, showcasing a healthy capital structure with more than half of the company's assets financed by equity.75
Positive
Cash Flow
Operating Cash Flow has decreased from $208.9 million in 2023 to $132.9 million in 2024, affecting the company's liquidity. However, the Free Cash Flow remains positive at $76.1 million in 2024, ensuring some financial flexibility. The Operating Cash Flow to Net Income Ratio is strong, indicating efficient cash conversion from net income.70
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.58B | 1.48B | 1.66B | 1.85B | 1.46B | 1.42B | Gross Profit |
| 566.26M | 529.34M | 592.40M | 675.51M | 532.32M | 541.87M | EBIT |
| 163.84M | 36.61M | 113.69M | 233.09M | 151.68M | 176.02M | EBITDA |
| 232.31M | 145.94M | 205.56M | 305.52M | 210.15M | 236.96M | Net Income Common Stockholders |
| 142.41M | 54.21M | 128.28M | 199.66M | 134.74M | 134.68M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 722.09M | 722.09M | 1.04B | 458.82M | 546.67M | 483.02M | Total Assets |
| 2.26B | 2.26B | 2.56B | 1.99B | 1.82B | 1.65B | Total Debt |
| 582.52M | 107.00M | 1.02B | 390.03M | 408.58M | 338.64M | Net Debt |
| -139.56M | -615.08M | -21.80M | -68.78M | -135.80M | -141.73M | Total Liabilities |
| 1.06B | 1.06B | 1.41B | 925.90M | 945.84M | 833.30M | Stockholders Equity |
| 1.20B | 1.20B | 1.14B | 1.07B | 870.85M | 814.74M |
| Cash Flow | Free Cash Flow | ||||
| 57.03M | 76.14M | 147.93M | 124.70M | 108.37M | 164.75M | Operating Cash Flow |
| 100.15M | 132.92M | 208.94M | 183.59M | 140.25M | 201.24M | Investing Cash Flow |
| -185.67M | -73.54M | -64.75M | -208.27M | -47.30M | -42.84M | Financing Cash Flow |
| -41.97M | -377.09M | 445.68M | -61.87M | -25.37M | -29.61M |
Advanced Energy Technical Analysis
Neutral
107.17
Price Trends
114.99
Negative
115.05
Negative
110.35
Negative
Market Momentum
-3.06
Negative
45.20
Neutral
69.36
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AEIS, the sentiment is Neutral. The current price of 107.17 is below the 20-day moving average (MA) of 108.85, below the 50-day MA of 114.99, and below the 200-day MA of 110.35, indicating a bearish trend. The MACD of -3.06 indicates Negative momentum. The RSI at 45.20 is Neutral, neither overbought nor oversold. The STOCH value of 69.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AEIS.
Advanced Energy Risk Analysis
Advanced Energy disclosed 38 risk factors in its most recent earnings report. Advanced Energy reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Advanced Energy Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $97.35B | 23.05 | 50.42% | 1.13% | 13.21% | 27.25% | |
76 Outperform | $125.89B | 19.90 | 35.19% | 1.05% | 4.45% | -10.01% | |
73 Outperform | $14.72B | 26.35 | 20.29% | 0.55% | 5.52% | 16.59% | |
65 Neutral | $5.94B | 31.37 | 7.93% | 1.00% | -0.99% | ― | |
64 Neutral | $3.97B | 73.46 | 4.80% | 0.38% | -10.49% | -57.78% | |
62 Neutral | $8.27B | 14.03 | 2.36% | 3.08% | 3.85% | -14.32% | |
53 Neutral | $10.57B | ― | 0.88% | ― | 14.61% | 85.44% |
* Industrials Sector Average
Performance Comparison
AEIS
Advanced Energy
107.17
8.91
9.07%
AMAT
Applied Materials
154.95
-49.99
-24.39%
COHR
Coherent Corp
76.71
17.03
28.54%
LRCX
Lam Research
77.99
-17.68
-18.48%
MKSI
MKS Instruments
91.45
-34.11
-27.17%
TER
Teradyne
91.00
-16.71
-15.51%
Advanced Energy Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: -3.52% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive sentiment, driven by strong financial performance in the semiconductor and data center sectors, significant progress in product launches and factory consolidation, and robust cash flow. However, challenges remain in the Industrial and Medical and Telecom and Networking sectors, with ongoing inventory corrections and higher operating expenses.Highlights
Strong Financial Performance in Fourth Quarter 2024
Revenue of $415 million exceeded guidance, marking a return to year-over-year growth. Gross margin reached 38%, the best in three years, with earnings per share at $1.30, also above guidance.
Record Data Center Computing Revenue
Data center computing revenue grew 10% sequentially and 41% year-over-year, driven by strength in hyperscale. This was a record quarter for data center computing product revenue.
Semiconductor Revenue Growth
Semiconductor revenue increased 15% sequentially and 19% year-over-year, driven by higher demand and new product shipments.
Successful Product Launches
Launched 35 new platform products in 2024, with continued strong demand for EVOS, eVerest, and NavX products, leading to over 250 qualification units shipped by year-end.
Factory Consolidation Progress
Significant progress on factory consolidation plan aimed at moving gross margin above 40%, with plans to complete by mid-year 2025.
Strong Cash Flow and Balance Sheet
Cash flow from operations was $83 million, contributing to a total cash balance of $722 million, with $157 million in net cash.
Lowlights
Industrial and Medical Market Challenges
Industrial and Medical revenue was flat sequentially and down year-over-year due to elevated inventory levels and lackluster demand.
Telecom and Networking Revenue Decline
Telecom and networking revenue was down year-over-year, although it grew 20% sequentially.
Higher Operating Expenses
Operating expenses increased by 5% from the previous quarter, driven by higher sales and incentive-related expenses.
Ongoing Inventory Corrections
Continued inventory corrections in Industrial and Medical markets, with expectations for recovery starting as early as the second quarter of 2025.
Company Guidance
In the Advanced Energy fourth-quarter 2024 earnings call, the company provided guidance indicating strong performance with revenue reaching $415 million, exceeding their guidance range and marking a year-over-year growth return. The semiconductor segment saw a 15% sequential revenue increase, largely driven by demand for new products like EVOS, eVerest, and NavX. Gross margins improved to 38%, the best in three years, supported by higher volumes and factory efficiency. For 2025, they anticipate semiconductor revenue growth surpassing market rates, driven by new product ramps in the second half, while data center demand is expected to remain robust. They also plan to complete their factory consolidation to enhance gross margins above 40% and pursue strategic acquisitions to further accelerate growth.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.