Why Universal Display Corporation Shares Skyrocketed
Nov 8th 2013 1:33PM
Updated Nov 8th 2013 1:34PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Universal Display Corporation jumped more than 25% during intraday trading Friday after the OLED technologist's third-quarter results absolutely crushed estimates.
So what: Quarterly revenue nearly tripled from the same year-ago period to $32.5 million, which translated to third-quarter net income of $5.5 million, or $0.12 per share. By comparison, Universal Display turned in a $0.12 per share net loss on sales of just $12.5 milllion during the third quarter of 2012.
Meanwhile, analysts were expecting Universal Display to report a $0.04 per share loss this quarter on sales of just $21.76 million.
As a result, Universal Display also raised its full-year 2013 revenue guidance to a range of $142 million to $144 million, up from its previous guidance for annual sales to come in at the high end of its $110 million to $125 million range.
Now what: This quarter's beat is particularly compelling considering it didn't include Universal Display's twice-per-year $20 million license payment from Samsung. Rather, crucial material sales finally paved the way to profits after rising 176% year over year to a record $30.3 million.
Though shares may look expensive trading at nearly 32 times next year's estimated earnings, I think Universal Display's superior revenue and earnings growth makes it a well-deserved premium. Assuming Universal Display can indeed maintain its momentum going forward, patient long-term investors should still stand to be handsomely rewarded.
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The article Why Universal Display Corporation Shares Skyrocketed originally appeared on Fool.com.Fool contributor Steve Symington owns shares of Apple and Universal Display. The Motley Fool recommends Apple and Universal Display. The Motley Fool owns shares of Apple and Universal Display. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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