Not finding a firm footing yet for Nanometrics Inc.

The stock price of Nanometrics Incorporated fell further below US$29 and closed Friday’s trading session on March 01, 2019 at US$28.85, up 39 US cents or 1.37 per cent.

Source: Yahoo! Finance (March 01, 2019)

The stock price has not fallen below the US$29.00 price level since it last reported on February 05, 2019, which missed analysts’ expectations.

Earlier, since we were keeping track on the stock price on a weekly basis, the stock price movements of NANO has been somewhat rangebound, and did not make any dramatic upturn pre- and post-earnings release. One thing to note for investors is even though the earnings missed out of the various target benchmarks, there has not been any significant downward price pressures of the stock price, which could mean that investors are not taking any drastic actions on the stock price.

Where shall investors look out for next?

While more downward pressures might exert towards NANO’s stock price, the stock price valuations do not present as very expensive with price-to-earnings (P/E) multiple of 12 to 14 times. So, in the meantime, we continue to monitor NANO’s stock price closely.

No significant price trends shown for Nanometrics Inc.

Since the earnings announcement made on February 05, 2019, the stock price trends of Nanometrics Incorporated has not changed much as shown in the following one-year daily chart diagram:

Source: Yahoo! Finance (February 22, 2019)

At the last traded price of US$29.59, down 6 US cents, or negative 0.20 per cent intraday on February 22, 2019, the stock has not been able to push above the US$30.00 or even the US$35.00 price handle.

Based on the market capitalisation value of US$716.54 million, with the trailing and forward price-earnings (P/E) multiples at 12.65 and 14.36 times respectively, the 10-day average trading volume was about 169.09k, which is less than the 22.62 million shares on float.

Moreover, despite the disappointing earnings outlook for 1QFY2019, the percentage of shorts as a percentage of the overall float volume as of January 31, 2019 is 10.52 per cent which is not significant. Until we are able to get the February short volume percentages, especially when it had only reported earnings in early February 2019, it will be interesting to know how sizeable to short volume is.

Where or what to look out for next week?

While the overall earnings season for non-retail sector counters are largely winding down, it is expected that volatility might return and with higher expectations. We will continue to monitor the stock price of NANO on whether it has broken the US$30.00 decisively and moving upwards to hit US$35.00 and above.

However, it the stock price does turn south, we cannot rule out that it might go lower than US$20.00. Until then, we shall continue to monitor the counter’s stock price movements closely.


Nanometrics Incorpoated – One Week Since its Earnings Release

It has been a week or so since Nanometrics Incorporated (NANO) reported its earnings which beat consensus estimates, but its forward earnings guidance for 1QFY2019 fell short of estimates. The Company’s stock price stood largely unchanged and it was last traded at US$30.24, up by 40 US cents or 1.34 per cent intraday as of market close on February 15, 2019.

One-Year Daily Chart Showing Consolidation

Source: Yahoo! Finance (February 15, 2019)

The one-year daily chart shown above indicated NANO’s stock price is showing consolidation as it overs around the US$30 price handle and has not moved significantly. There is largely sideways movement without any potential significant upside or downside to the stock price since it posted its earnings on February 05, 2019.

What to expect the stock price in the coming few weeks

While NANO’s stock price has not shown any significant sharp movements, we think that given that there was a ‘Dead Cross’ formation where the 50-day simple moving average (MA) line (purple colour) ‘cuts’ below the 200-day simple MA line (turquoise colour) since mid-December 2018, there are still many chances that there could be a continuation of stock price declines going forward despite the cheap price multiples we have seen in the company’s overall financial fundamentals where both the trailing and forward price-earnings (P/E) multiples are in the 12 to 15 times ranges.

While the stock price has not gone below US$25 as forecasted earlier on an earnings shortfall sceanario, we think that most investors will be keenly watching for the US$25 level and below before they will make any investment decision. For now, we think that investors might be adopting a ‘wait-and-see’ mode before pouncing on any significant deterioration in the stock price levels.

Meanwhile, stay tuned! We shall continue monitoring.

Nanometrics recorded strong earnings, but stock price underperformed

Nanometrics (NANO) reported stronger than expected quarter and full year results ending December 31, 2018. The full-year revenues for December 31, 2018 came in at US$324.5 million, which was an increase of 25 per cent over 2017, and outpacing the growth of the overall wafer fab equipment (WFB) industry, driven by over 60 per cent growth in memory products market, the Company noted.  the company’s outperformance was also bolstered by significant competitive wins and increasing market share. In 4Q FY 2018, foundry, IDM and other device sales rebounded more than 50% over Q3, setting the stage for a significant increase in sales expected from these markets for the forthcoming year.

A summary of the earnings results is shown below:

Source: Company financials

The Company has also recorded US$103.3 million in cash flow from operating activities (CFO) during FY 2018, and after capital expenditures of US$7.5 million, free cash flows (FCFs) came in at US$95.8 million, or 30 per cent of the revenues. There were no significant interest-bearing debts on the balance sheet as of end FY 2018, and its cash and cash equivalents balance stood at US$110.95 million, up from US$34.90 million in FY 2017.

The Company is trading at a historical trailing tweleve months (TTM) price-earnings (P/E) multiple of 12.79 times, and a forward P/E of 13.15 times. The following is a summary of the share price multiples shown below:

Source: Yahoo! Finance (February 08, 2019)

Despite the robust earnings report, share price still underperformed

Source: Yahoo! Finance (February 08, 2019)

Despite the latest earnings report, the stock could not bypass the US$30 psychological level at was last traded at US$29.06 as of February 08, 2019.

Taking a look and comparing Street’s estimates

Source: Yahoo! Finance (February 08, 2019)

With average expecations of top and bottom-lines for FY 2018 at US$320.15 million, and US$2.25 per share respectively, the Company have beaten both estimates for FY 2018.

The Company has also put out its earnings expectations for 1Q FY 2019 for March 2019, and it stated the following:

Management expects first-quarter 2019 revenues in the range of $62 to $68 million. Gross margin is expected to be approximately 51.0%, plus or minus 1%, on a GAAP basis and 53.5%, plus or minus 1%, on a non-GAAP basis.  Management expects first-quarter operating expenses to range between $28.0 million and $29.0 million on a GAAP and non-GAAP basis, and earnings in the range of $0.09 to $0.20 per diluted share on a GAAP basis and $0.16 to $0.27 on a non-GAAP basis.”

A look at the earnings expectations by the Street’s estimate showed that the average revenue and GAAP EPS estimates for 1Q FY 2019 are around US$72.0 million and US$0.41 and thus this has fallen short given what was noted in the earnings outlook.

The shortfall in the 1Q FY 2019 earnings outlook might have explained the stock price underperformance following the release of their full year financials earlier in the week.

What to expect in the near-term and going forward

While the stock price of NANO did underperform due to an underwhelming earnings outlook, the low to competitive price valuations appears to be one of the key drivers for the continued enthusiasm over the overall fundamentals. Moreover, the Company has a reasonably good cash standing, and has no significant interest-bearing debt. This might prove critical during periods of extreme downside stress that might impact the overall economy and industry.

However, its exposure to the technological sector as mentioned in their latest earnings statement where a majority of the revenues are derived from wafer fab equipment continues to pose cyclical fluctuations and investors do need to pay attention to the constant shift in demand and supply conditions impacting the wafer fabrication equipment industry and overall technology sector.

Nanometrics stock price broke past the US$30 level

With the earnings results of Nanometrics Incorporated (NANO) coming up on Tuesday, February 05, 2019, there appears to be strong expectations of an earnings beat given the stock price has broken past the US$30.00 per share level to head upwards as shown to close the week ending February 01, 2019 at US$31.09, or up 50 US cents, or 1.63 per cent intraday.

The one-year daily chart of NANO is shown below:

Source: Yahoo! Finance (February 01, 2019)

As shown on the chart, and explain in my previous articles discussing about NANO’s stock momentums, we believe that while the stock might experienced various bouts of volatilities in December 2018, the counter has finally push above the US$30.00.

With the recent breakthrough in the stock price, we think that the next stock price might attempt to push itself towards US$34.00 – US$35.00 per share, barring any extreme market shocks/volatilities.

However, if NANO stock fails to push past US$33.00, which is the mid-point of the US$31.00 – US$35.00 price range, we think that the stock price could push below the US$25.00 per share level.

EPS trends are unchanged

Source: Yahoo! Finance (February 01, 2019)

With a few days to go before the Company reports, we noted that based on the data provided on Yahoo! Finance, the earnings per share (EPS) trends for NANO appear to be unchanged, and remains at US$0.40 for the December 2018 quarter, and US$2.25 for FY 2018.

Investors, and shareholders, do stay tune for February 05, 2019 when the Company is expected to release their FY 2018 financial results.

Nanometrics reports on February 05, 2019 with a historic run in the stock price

Nanometrics Incorporated (NANO) is scheduled to report on Tuesday, February 05 2019 according to a press release issued on January 15, 2019. With a forward price-earnings (P/E) multiple of 13.88 times, the stock which trades at the market closing price of US$30.67 as of January 25, 2019, remains competitively valued with the consensus estimates of average earnings per share of US$2.25 per share, and total revenues of US$320.15 million for the full-year ending December 31 2018.

 How are the price charts looking for NANO?

Source: Yahoo! Finance (January 25, 2019)

The stock was last traded on January 25, 2019 at US$30.67, up US$1.66 or 5.72 per cent intraday. At the current price, the stock has punched above the 50-day simple moving average (SMA) line at US$29.22, and the next short-to-intermediate resistance level is US$31.86 which is the 100-day SMA denoted by the dark blue line on the chart shown above.

 However, should it failed to push upwards the 100-day SMA level, we expect the stock price to fall to US$25.00. It the stock price does break above the US$31.86 resistance level, we think the stock will move to a intermediate-to-long-term stock price target of US$34.56 which is the 200-day SMA denoted by the orange line on the chart above.

 According to data provided by Yahoo! Finance, we noted that earnings expectations remain high with 2 analysts among the four that were surveyed indicating a “Strong Buy” rating, while one analyst each has a recommendation of “Buy”, and “Hold” respectively. There were no analysts rating the stock with a “Sell” rating and below. The average one-year expected price target is US$37.67.

 What are our thoughts on the fundamentals of NANO?

 While we are not in the position of providing any specific stock recommendations, we noted that the stock price which trades at a forward P/E ratio of between 13 to 14 is neither cheap or expensive. However, with the rising interest rate expectations, coupled with a general slowdown in the world economy, we think that investors might need to examine closely the overall earnings fundamentals with the anticipated slower earnings growth expectations.

 However, we also recognised that nanotechnology is still a new scientific concept that has started to gain prominence, we think that investors have yet fully embraced how nanotechnology will be applied into everyday usage. At this stage, we think that growth expectations are quite high and unlike other industries, the industry is starting to gain prominence and acceptance.

Nanotechnology and Quantum Physics are related fields. Schroedinger's Cat paradox is a synonym for Quantum Physics due to the superposition principle. connects Nanotechnology with the financial market. Research in Nanotechnology has to make the transition into the markets. It will change the global economy if research is taken into the economy. There have been many advances in Nanotechnology but no breakthrough into the market. That is why research and economics and also the stock market have to be connected. Read about Stock market news and headlines in nanotechnology or discuss your ideas in the forum.

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