Shares of ACM Research (ACMR -2.94%) were among the winners today after the maker of specialized equipment for cleaning semiconductor wafers posted better-than-expected results in its second-quarter earnings report.
The stock was up 17.9% as of 3:32 p.m. ET today.
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ACM Research scores a win
ACM Research posted revenue growth of 40% to $202.5 million, which was well ahead of the consensus of $163.1 million.
The company continues to see strong demand in China, where a majority of its sales come from, as capital expenditures among Chinese chip foundries remain high. ACM has also avoided some of the export restrictions that have weighed on other chip companies since its equipment isn't generally used for the most advanced kinds of chips.
Growth was primarily driven by shipments, which were up 32% in the quarter, and it introduced its new panel electrochemical plating tool for fan-out panel-level packaging, which will help achieve uniformity and precision on panels.
Gross margin in the quarter slightly improved from 47.5% to 47.8%, and operating income rose 24% to $37.6 million as operating expenses grew faster than revenue. On the bottom line, adjusted earnings per share jumped from $0.48 to $0.55, which also easily beat the consensus at $0.35.
CEO David Wang said:
I am pleased with our second quarter results. We delivered record revenue, strong profitability, and positive cash flow from operations. We are benefiting from continued investments by our customers, and market share gains from our existing and new products.
What's next for ACM Research?
The company also raised its guidance for the year as it now sees revenue of $695 million to $735 million, up from an earlier range of $650 million to $725 million, which is based on its current assessment of international trade policy.
ACM Research seems to trade at a discount because of fears of new chip export regulations or another weakness in China, but the stock is too cheap to ignore, as it's now trading at a price-to-earnings ratio of 8.6. Considering the company's growth rate, the stock should only go up unless its business suddenly collapses due to an unforeseen issue in China.
