Advanced Energy Industries, Inc Rips to New Highs on Record Q3 Results

AEIS StockAdvanced Energy Industries Stock Up 146% Since March

Advanced Energy Industries, Inc. (NASDAQ:AEIS) stock has been on a tear since the market bottomed in March. AEIS stock is up 19.1% year-over-year and up 284% from March.

Unlike some tech stocks that have just been along for the ride, Advanced Energy Industries stock has been moving higher because the company has been reporting record results.

For the third quarter ended September 30, Advanced Energy Industries reported record revenue, earnings, and cash flow. It also provided a strong outlook for the fourth quarter. This helped propel the company’s share price to its highest trading range in over three years.

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AEIS Stock Overview

Advanced Energy Industries designs and manufactures highly engineered, precision power conversion, measurement, and control solutions worldwide. (Source: “Powering the 4th Industrial Revolution Summer 2020,” Advanced Energy Industries, Inc., last accessed November 12, 2020.)

The company is a leader in powering the fourth industrial revolution (the automation of traditional manufacturing and industrial practices with modern smart technology).

Advanced Energy Industries engineers the world’s most advanced power supplies and solutions for a wide range of industries, including semiconductor, industrial, manufacturing, telecommunications, data center computing, aerospace, defense, and medical.

The company is also targeting 5G, now that growth has returned to wireless infrastructure, along with capacity demand. From 2017 to 2022, wireless infrastructure spending is forecast to increase at a compound annual growth rate of 105%.

Advanced Energy Industries’ 5G growth strategy includes ramping up its current programs with key Tier 1 networking customers and winning new designs in 5G radio power for both macro and small cells.

Record Q3 Results

On November 5, Advanced Energy Industries announced that its revenue for the third quarter increased 122% year-over-year and 14.5% sequentially, to a record $389.5 million. (Source: “Advanced Energy Announces Third Quarter 2020 Results,” Advanced Energy Industries, Inc., November 5, 2020.)

Third-quarter net income from continuing operations was up 524% year-over-year and 55.6% sequentially, to a record $45.6 million ($1.18 per share). Adjusted net income was up 205% year-over-year and 40.5% sequentially, to $63.8 million ($1.66 per share).

Advanced Energy Industries generated a record $67.5 million of operating cash from continuing operations in the third quarter and made debt principal payments of $4.4 million.

Business Outlook

For the fourth quarter, AEIS expects to report:

  • Revenue of $360.0 million (plus or minus $20.0 million), versus $338.3 million in the fourth quarter of 2019
  • Generally accepted accounting principles (GAAP) earnings per share (EPS) from continuing operations of $1.03 (plus or minus $0.21), compared to $0.27 in the fourth quarter of 2019
  • Non-GAAP EPS of $1.30 (plus or minus $0.20), versus $0.87 in the fourth quarter of 2019

Analyst Take

Before the coronavirus pandemic hobbled the stock market in March, Advanced Energy Industries stock was on a roll. From January 2019 to February 2020, AEIS stock advanced 82%.

Thanks to resilient financial results throughout the downturn, Advanced Energy Industries, Inc. was able to mount a quick rebound. In the midst of a global pandemic and constrained economic activity, the company was able to report strong first-quarter results and record second- and third-quarter results.

Advanced Energy Industries also provided strong guidance for the fourth quarter. Longer-term, the company’s three-year goal is to report annual revenue in excess of $1.5 billion and adjusted earnings of at least $6.50 per share.