IPG Photonics Corporation (IPGP): A Laser Company With Staggering Growth Potential

Stacked Up With Peers

IPG Photonics shares the market space with Rofin-Sinar Technologies (NASDAQ:RSTI), II-VI, Inc. (NASDAQ:IIVI), Coherent, Inc. (NASDAQ:COHR) and Newport Corporation (NASDAQ:NEWP).

Company Forward P/E PEG Debt/Equity Net Profit Margin 5yr EPS growth est.
IPG Photonics 15.85x 0.95x 3% 26.74% 22.33%
II-VI Inc (NASDAQ:IIVI). 14.63x 1.65x 20% 10.35% 13%
Coherent Inc (NASDAQ:COHR). 14.39x 1.85x 0% 7.89% 12.5%
Newport Corp (NASDAQ:NEWP). 16.78% 1.09x 47% 9.38% 10%
Rofin-Sinar Tech. 14.97x -NA- 4% 6.53% -7.4%

From the above table, all the companies appear to be trading at similar P/E valuations, but IPG Photonics appears to be a bargain when its growth prospects are rolled in. That said, IPG Photonics, Coherent and Rofin-Sinar operate with little or no debt, but clearly IPG Photonics enjoys the highest net margin amongst the group. II-VI and Newport not only appear slightly overvalued, but also have relatively high debt to equity levels. IPG Photonics steals the show here, and analysts expect its annual EPS growth to average around 22% for the next 5 years. This means that an investment could double in value in just over 3 years time.

A Short Conclusion

IPG Photonics is not only leading the laser market by volumes, but also by innovation. Its balance sheet looks strong, and its metrics indicate that its shares are slightly undervalued. As major economies are showing signs of recovery, I think its order book will continue to expand. It has a combination of great fundamentals and financials, and I think IPG Photonics is worth a buy rating.

The article A Laser Company With Staggering Growth Potential originally appeared on Fool.com and is written by  Piyush Arora.

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