Entegris Inc: Momentum Stock up 68% YOY & Going Strong

Entegris stockEntegris Inc: Chipmaker a Top Momentum Stock

Entegris Inc (NASDAQ:ENTG) continues to be one of the best tech momentum stocks. The chipmaker’s share price is up 68% year-over-year and approximately 56% year-to-date, and it has climbed an impressive 123% since hitting March lows. It is also trading around six percent above its 50-day moving average.

In addition to tech stocks generally performing well since March, Entegris stock should experience near-term tailwinds off its recently announced strong third-quarter results, which topped expectations. The company also raised its guidance for the fourth quarter.

Chart courtesy of StockCharts.com

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Entegris Inc Overview

Entegris Inc sells consumable materials used in the production of computer chips. This includes specialty chemicals, delivery systems for liquids and gases, and advanced materials handling solutions that are used for manufacturing processes in the semiconductor and other high-end industries. (Source: “Corporate Overview,” Entegris Inc, last accessed October 22, 2020.)

The Billerica, MA-based company operates through three segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC), and Advanced Materials Handling (AMH).

The SCEM segment offers high-performance and purity process chemistries, gases, and materials, as well as delivery systems that support semiconductor and other advanced manufacturing processes.

The MC segment provides solutions that filter and purify critical liquid chemistries and gases used in semiconductor manufacturing processes and in other high-technology industries.

The AMH segment develops solutions to monitor, protect, transport, and deliver critical liquid chemistries, wafers, and other substrates for application in the semiconductor and other high-technology industries.

Entegris’ customers include semiconductor device manufacturers, semiconductor equipment makers, gas and chemical manufacturing companies, wafer grower companies, manufacturers of high-precision electronics, flat panel display equipment makers, and manufacturers of hard-disk drive components and devices.

The company has manufacturing, customer service, and/or research facilities in the U.S., Canada, China, France, Germany, Israel, Japan, Malaysia, Singapore, South Korea, and Taiwan.

Tops Q3 Estimates, Raises Q4 Guidance

On October 22, Entegris announced that its revenue for the third quarter, ended September 26, increased 22% year-over-year to $481.0 million. (Source: “Entegris Reports Results for Third Quarter Of 2020,” Entegris Inc, October 22, 2020.)

Net income was $79.3 million ($0.58 per share), a 95% increase over the third-quarter 2019 net income of $40.7 million ($0.30 per share). Third-quarter 2020 net income included $11.7 million of amortization in intangible assets and $1.3 million in integration costs.

Adjusted third-quarter net income was $91.5 million ($0.67 per share), a 34.3% increase over the $68.1 million ($0.50 per share) recorded in the same prior-year period.

Analysts expected Entegris to report adjusted earnings of $0.63 on sales of $461.8 million.

Fourth-Quarter Outlook

For the fourth quarter, Entegris expects to report:

  • Revenue between $480.0 and $495.0 million, compared to record revenue of $427.0 million in Q4 2019
  • Net income between $75.0 and $82.0 million, versus $57.4 million in Q4 2019
  • Diluted earnings per share (EPS) between $0.55 and $0.60, compared to $0.42 in Q4 2019
  • Adjusted net income between $84.0 and $91.0 million, compared to $74.6 million in the same period last year
  • Adjusted EPS between $0.62 to $0.67, compared to Q4 2019 adjusted earnings of $0.55

Analyst Take

Entegris Inc has been rewarding investors with serious growth since the start of 2016, with ENTG stock soaring 520%. Trading near record levels, Entegris stock looks poised for additional near- and long-term growth.

The company reported better-than-expected third-quarter results—which isn’t a total surprise, as it has surpassed earnings estimates for the last four consecutive quarters.

Management raised their fourth-quarter guidance, saying they’re “looking forward to a strong close to the year” and that they’re expecting to “deliver record sales and non-[generally accepted accounting principles] EPS in 2020.”