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MKS Instruments (MKSI) Beats on Q3 Earnings and Revenues

Zacks Equity Research
Updated

Premium scientific & technical instruments company, MKS Instruments, Inc. MKSI reported better-than-expected third-quarter 2017 results. The company noted that the stellar performance was majorly stemmed by the benefits accrued from its growth-oriented business investments.

Earnings and Revenues

Quarterly adjusted earnings came in at $1.56 per share, handily outpacing the Zacks Consensus Estimate of $1.46 per share. Also, the bottom line came in higher than the year-ago tally of 88 cents per share.

Quarterly revenues of $486.3 million surpassed the Zacks Consensus Estimate of $477 million. The top line also came in 27.7% higher than the prior-year figure.

Sales of Products during the quarter came in at $434.7 million, up from the year-ago tally of $335.2 million. Sales of Services during the reported quarter totaled $51.6 million compared to $45.5 million recorded in the year-earlier period.

MKS Instruments, Inc. Price, Consensus and EPS Surprise

 

MKS Instruments, Inc. Price, Consensus and EPS Surprise | MKS Instruments, Inc. Quote

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Costs and Margins

Total cost of revenues during the quarter was $258.3 million, up from $212.3 million recorded in the prior-year quarter. Adjusted gross profit margin during the quarter came in at 46.9%, expanding 100 basis points (bps) year over year.

Selling, general and administrative expenses totaled $71.8 million, higher than $68 million incurred in the year-ago quarter. In addition to this, research and development expenses came in at $32.5 million, up from $32.3 million recorded in third-quarter 2016. Adjusted operating margin in the reported quarter was 25.5%, up 150 bps year over year.

Balance Sheet

Exiting third-quarter 2017, MKS Instruments had cash and cash equivalents of $306 million, up from $228.6 million recorded at the end of 2016. Long-term debt came in at $435.7 million, down from $601.2 million recorded on Dec 31, 2016.

Outlook

MSK Instruments intends to deleverage its balance sheet by lowering interest expenses through prepayment of term-loans. The company believes investments made in sales and applications support functions, as well as efforts of launching advanced products will continue to drive its performance in the quarters ahead.

Based on the existing market conditions, this Zacks Rank #2 (Buy) company estimates to report revenues within the range of $480-$520 million and earnings in the $1.52-$1.76 per share range for fourth-quarter 2017.

Other Stocks to Consider

Other top-ranked stocks in the same space are listed below:

Agilent Technologies, Inc. A currently carries a Zacks Rank of 2 and has an average positive earnings surprise of 13.98% for the last four quarters. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Apple Inc. AAPL also holds a Zacks Rank of 2 and generated an average positive earnings surprise of 3.82% over the trailing four quarters.

Analog Devices, Inc. ADI, another Zacks Rank #2 stock, pulled off an average positive earnings surprise of 19.05% during the same time frame.

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