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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