What's In The Offing For IPG Photonics' (IPGP) Q2 Earnings?

IPG Photonics Corporation (NASDAQ:IPGP) is scheduled to report second-quarter 2019 results on Jul 30.

Notably, the company beat the Zacks Consensus Estimate in two of the trailing four quarters, with an average negative surprise of 0.51%.

Past-Quarter Performance

The company had reported first-quarter 2019 adjusted earnings of $1.02 per share, lagging the Zacks Consensus Estimate by 2 cents.

Further, revenues declined 9% from the year-ago quarter to $315 million. However, the figure had surpassed the Zacks Consensus Estimate by 3.5%.

Guidance & Estimates

For the second quarter, IPG Photonics expects sales in the range of $340 million to $370 million. The Zacks Consensus Estimate for revenues is currently pegged at $356.56 million, indicating a decline of almost 13.8% from the year-ago quarter.

Management projected earnings in the range of $1.25-$1.55 per share.. The Zacks Consensus Estimate for earnings is pegged at $1.41 per share, suggesting a fall of approximately 37.1% from the year-ago reported figure. Notably, estimates have declined 1.4% in the past 30 days

Let’s see how things are shaping up prior to this announcement.

Factors Likely to Influence Q2 Results

IPG Photonics is gradually expanding into new end-markets like advanced applications (3D Printing, Cinema, and micro-materials processing), communications and medical based on robust product portfolio and strength in intellectual property (IP), which favors growth prospects. This is expected to aid the company in upcoming quarterly results.

The company is developing new medical applications utilizing fiber lasers for urological and dental procedures. Solid adoption of laser-based medical solutions, beam delivery accessories and cinema projection systems is likely to be a tailwind for the to-be-reported quarter’s results.

Moreover, acquisition of Genesis Systems Group (Genesis) is aiding IPG Photonics’ drive the top line. Management intends to utilize Genesis' robotic systems integration capabilities to extend laser processing offerings to industrial, aerospace and transportation end markets, which is a positive. Notably, Genesis contributed $24 million to total revenues in the first quarter.

Further, Menara Networks buyout is aiding the company to enhance capabilities of its transceiver products, and expand presence in communications end market, which bodes well.

The aforementioned factors are anticipated to aid the company to eventually lower exposure in the core material processing market, which is likely to reflect positively in the to-be-reported quarter’s results.

Additionally, incremental adoption of latest 2 and 4 kilowatt QCW-mode laser solutions is anticipated to boost the to-be-reported quarter’s financials.

However, IPG Photonics’ dependence on select customers, pricing headwinds on account of competition; and substantial exposure to China amid tariff imposition are likely to weigh on second-quarter performance. Further, trade associated challenges in Europe are a headwind.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

IPG Photonics has a Zacks Rank #3 and an Earnings ESP of -4.12%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Asure Software (NASDAQ:ASUR) has an Earnings ESP of +8.11% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Warrior Met Coal, Inc. (NYSE:HCC) has an Earnings ESP of +8.66% and a Zacks Rank #2. The company is scheduled to report second-quarter 2019 earnings on Jul 31.

CGI Group, Inc. (NYSE:GIB) has an Earnings ESP of +1.27% and a Zacks Rank #2. The company is set to report third-quarter 2019 earnings on Jul 31.

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