Photronics Story

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PLAB -- USA Stock  

USD 11.92  0.21  1.73%

As many of us are excited about technology space, it is fair to go over Photronics. We will evaluate why we are still confident in anticipation of a recovery. Is the firm valuation justified? Here we go over Photronics perspective on valuation to give you a better outlook on taking a position in this stock.
Published over a month ago
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Is Photronics (NASDAQ:PLAB) ready for a correction?
Photronics currently holds 60.37 M in liabilities with Debt to Equity (D/E) ratio of 0.06, which may suggest Photronics is not taking enough advantage from borrowing. The entity has a current ratio of 2.85, suggesting that it is liquid enough and is able to pay its financial obligations when due. The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Photronics has an asset utilization ratio of 61.64 percent. This suggests that the company is making $0.62 for each dollar of assets. An increasing asset utilization means that Photronics is more efficient with each dollar of assets it utilizes for everyday operations.
We determine the current worth of Photronics using both absolute as well as relative valuation methodologies to arrive at its intrinsic value. In general, an absolute valuation paradigm, as applied to this company, attempts to find the value of Photronics based exclusively on its fundamental and basic technical indicators. By analyzing Photronics's financials, quarterly and monthly indicators, and related drivers such as dividends, operating cash flow, and various types of growth rates, we attempt to find the most accurate representation of Photronics's intrinsic value. In some cases, mostly for established, large-cap companies, we also incorporate more traditional valuation methods such as dividend discount, discounted cash flow, or asset-based models. As compared to an absolute model, our relative valuation model uses a comparative analysis of Photronics. We calculate exposure to Photronics's market risk, different technical and fundamental indicators, relevant financial multiples and ratios, and then comparing them to Photronics's related companies.

Photronics Investment Alerts

Photronics investment alerts and warnings help investors to get more proficient at understanding not only critical technical and fundamental signals but also the significant portfolio-centered indicators. These indicators include beta, alpha, and other risk-related measures that will help you in monitoring Photronics performance across your portfolios.Please check all investment alerts for Photronics

Photronics Valuation Ratios as Compared to Competition

Our valuation model uses many indicators to compare Photronics value to that of its competitors to determine the firm's financial worth. You can analyze the relationship between different fundamental ratios across Photronics competition to find correlations between indicators driving the intrinsic value of Photronics.

How Photronics utilizes its cash?

To perform a cash flow analysis of Photronics, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Photronics is receiving and how much cash it distributes out in a given period. The Photronics cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities. Photronics Net Cash Flow from Operations is projected to decrease significantly based on the last few years of reporting. The past year's Net Cash Flow from Operations was at 78.64 Million

Exercise or conversion by Lee Kang Jyh of 12000 shares of Photronics subject to Rule 16b-3

Legal trades by Photronics insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
Photronics insider trading alert for exercise of non-qualified stock options by Lee Kang Jyh, President Asia IC Photomask, on 21st of January 2021. This event was filed by Photronics Inc with SEC on 2021-01-21. Statement of changes in beneficial ownership - SEC Form 4 [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

A Deeper Perspective

The firm reported the previous year's revenue of 616.66 M. Net Income was 37.06 M with profit before overhead, payroll, taxes, and interest of 120.84 M.

Margins Breakdown

Photronics profit margins show the degree to which it makes money. Margin indicators are used not only by investors but also by creditors or Photronics itself as indicators of financial health and management effectiveness. Please look more closely at the different varieties of Photronics profit margins.
5.06
Profit Margin
11.57
Operating Margin
12.16
EBITDA Margin
Operating Margin11.57
EBITDA Margin12.16
Gross Margin27.02
Profit Margin5.06


Photronics Net Income Per Employee is decreasing over the last 6 years. Moreover, Photronics Average Assets is increasing over the last 6 years. The current value of Photronics Average Assets is 1,142,222,736.

Will price continue to rise in January 2021?

Photronics current variance builds up over 4.35. Photronics currently demonstrates below-verage downside deviation. It has Information Ratio of 0.21 and Jensen Alpha of 0.43. However, we do advice investors to further question Photronics expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk.

Our Bottom Line On Photronics

Whereas many other companies within the semiconductor equipment & materials industry are still a little expensive, even after the recent corrections, Photronics may offer a potential longer-term growth to investors. In closing, as of the 9th of December 2020, we believe that at this point, Photronics is undervalued with very low probability of distress within the next 2 years. Our current buy-or-sell advice on the company is Strong Buy.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Gabriel Shpitalnik do not own shares of Photronics. Please refer to our Terms of Use for any information regarding our disclosure principles.

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