MKS Instruments, Inc’s MKSI impressive second-quarter 2017 results, acquisition and deleveraging initiatives, and exposure in various attractive end markets make it a solid bet for investors now.
It currently sports a Zacks Rank #1 (Strong Buy).
Year to date, the company’s shares have yielded 34.6% return, outperforming 21.1% gain recorded by the industry it belongs to.
Why the Upgrade?
We believe that MKS Instruments’ impressive financial performance in second-quarter 2017 and outlook have led to positive market sentiments for the stock. In the quarter, the company’s earnings per share and revenues surpassed their respective year-ago tallies by 95.8% and 47.5%. The bottom-line improvement came on the back of benefits from the Newport Corporation acquisition (April 2016), strengthening end-market demand and improving margin profile.
In the quarters ahead, we believe that the company is poised to gain from presence in attractive end markets like semiconductor, industrial technology, research, life sciences and thin film. It has been working diligently, by engaging in research and development activities, to improve its product offerings to a wide customer base in these markets. Notably, its premium technologies like the Green Idle Mode technology and state-of-the-art products like the EtherCAT pressure control product line help in solving complex end-user problems, in turn, strengthening the company's customer relationships.
Synergistic benefits from acquired assets will prove advantageous. The Newport buyout is anticipated to yield cost synergies of $40 million by the end of 2017 while additional benefits are anticipated in 2018. Moreover, the company’s initiatives to deleverage its balance sheet by lowering interest expenses, through prepayment of term-loans will work in its favor.
Investors seem to be optimistic about MKS Instruments’ prospects, as evident from the positive revisions in earnings estimates for the stock. Over the last 60 days, the Zacks Consensus Estimate for the company increased 9.3% to $5.42 for 2017 and 9.3% to $5.87 for 2018.
MKS Instruments, Inc. Price and Consensus
MKS Instruments, Inc. Price and Consensus | MKS Instruments, Inc. Quote
Other Stocks to Consider
MKS Instruments has a market capitalization of approximately $4.3 billion. Other stocks worth considering in the industry include Brooks Automation, Inc. BRKS, Entegris, Inc. ENTG and Ultra Clean Holdings, Inc. UCTT. All these stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Brooks Automation’s earnings estimates for fiscal 2017 and fiscal 2018 were revised upward in the last 60 days. Also, the company delivered an average positive earnings surprise of 26.45% in the last four quarters.
Entegris pulled off an average positive earnings surprise of 11.88% for the last four quarters. Also, its earnings estimates for 2017 and 2018 improved in the last 60 days.
Ultra Clean Holdings’ earnings estimates for 2017 and 2018 were revised upward in the last 60 days. Also, the company’s average earnings surprise for the last four quarters was a positive 27.73%.
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