Photronics, Inc. – Value Analysis (NASDAQ:PLAB) : December 6, 2017

Capitalcube gives Photronics, Inc. a score of 29.

Our analysis is based on comparing Photronics, Inc. with the following peers – Micron Technology, Inc., AXT, Inc., Axcelis Technologies, Inc., SunEdison, Inc., United Microelectronics Corp. Sponsored ADR, IKONICS Corporation and ASML Holding NV ADR (MU-US, AXTI-US, ACLS-US, SUNEQ-US, UMC-US, IKNX-US and ASML-US).

Investment Outlook

Photronics, Inc. has a fundamental score of 29 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • It trades at a lower Price/Book multiple (0.72) than its peer median (1.57).
  • The market expects faster earnings growth from PLAB-US than from its peers and also a turnaround in its current ROE.
  • PLAB-US has relatively low profit margins and median asset efficiency.
  • Compared with its chosen peers, the company’s annual revenues and earnings change at a slower rate, implying a lack of strategic focus and/or lack of execution success.
  • Over the last five years, PLAB-US‘s return on assets has declined from about median to less than the median among its peers suggesting that the company’s historical competitiveness in operations is slipping away.
  • The company’s relatively low gross and pre-tax margins suggest a non-differentiated product portfolio and not much control on operating costs relative to peers.
  • While PLAB-US‘s revenues have increased slower than peer median, the market currently gives the company a higher than peer median P/E ratio and may be factoring in some sort of a strategic play.
  • The company’s level of capital investment is relatively low and suggests it is milking the business.

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Leverage & Liquidity

  • Of the 7 chosen peers for the company, only 6 of the stocks have an outstanding debt balance. Companies with no debt include AXTI-US.

PLAB-US has moved to a Constrained from an Quick & Able profile at the prior year-end.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Micron Technology, Inc. 26.48 2.34 9.79 88.4
AXT, Inc. 0 7.24 No interest exp 999
Axcelis Technologies, Inc. 11.71 6.3 8.37 102.69
SunEdison, Inc. 85.45 1.13 -0.88 -6.35
United Microelectronics Corp. Sponsored ADR 47.04 1.51 2.48 54.81
IKONICS Corporation 14.82 6.66 -9.32 11.03
ASML Holding NV ADR 4.82 2.76 47.96 93.67
Photronics, Inc. N/A 5.49 0 166.53
Peer Median 14.82 4.13 8.37 91.04
Best In Class 4.82 7.24 No interest exp 999

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Company Profile

Photronics, Inc. engages in the manufacture of photomasks. It is a key element in the manufacture of semiconductors and flat panel displays, and are used as masters to transfer circuit patterns onto semiconductor wafers and flat panel substrates during the fabrication of integrated circuits, and a variety of flat panel displays, and to a lesser extent, other types of electrical and optical components. It operates principally from nine manufacturing facilities; two of which are located in Europe, three in Taiwan, one in Korea, and three in the United States. The company was founded by Constantine S. Macricostas in 1969 and is headquartered in Brookfield, CT.


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