Zacks Investment Research upgraded MKS Instruments, Inc. (MKSI) to a Zacks Rank #1 (Strong Buy) on Nov 19, 2014. Going by the Zacks model, companies holding a Zacks Rank #1 have strong chances of performing better than the broader market.
Why the Upgrade?
Shares of MKS Instruments have gained nearly 7.4% since the company reported better-than-expected third-quarter 2014 results on Oct 22. Also, the positive market reaction was accompanied by an upward revision in earnings estimates for the company. A brief discussion on the third-quarter results is provided below:
Adjusted earnings came in at 43 cents per share, up from 25 cents earned in the year-ago quarter and the Zacks Consensus Estimate of 37 cents. Revenues rose 12.2% year over year on the back of improved productivity and advanced business processes. Gross margin grew 210 basis points to 43.3% while operating margin stood at 17.5% versus 12.2% in the year-ago quarter.
For fourth-quarter 2014, MKS Instruments expects revenues to come within $185−$200 million while earnings to fall within 42−53 cents per share range. Gross margin is predicted in a range of 44−45%. Also, the company remains committed toward rewarding its shareholders handsomely through dividend payments and share buybacks.
Impressive third-quarter results and outlook for fourth-quarter 2014 has made investors optimistic about MKS Instruments’ performance in the future. Over the last 30 days, the Zacks Consensus Estimate of the company has increased 7.1% to $1.82 for 2014 and 5.1% to $2.06 for 2015.
Other Stocks to Consider
MKS Instruments currently has a $1.9 billion market capitalization. Some better-ranked stocks in the machinery industry include Rudolph Technologies Inc. (RTEC), Tessera Technologies Inc. (TSRA) and Brooks Automation, Inc. (BRKS). While Rudolph Technologies and Tessera Technologies sport a Zacks Rank #1 (Strong Buy), Brooks Automation carries a Zacks Rank #2 (Buy).
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