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Universal Display (OLED) Beats on Q3 Earnings & Revenues

Zacks Equity Research

Universal Display Corporation OLED reported third-quarter 2019 adjusted earnings of 78 cents per share surpassing the Zacks Consensus Estimate by 36.8%. The figure improved 62.5% year over year.

Revenues increased 257% to $97.5 million and outpaced the Zacks Consensus Estimate of $85 million.

Raised Revenue Guidance Holds Promise

Universal Display updated guidance for fiscal 2019. The company now anticipates revenues between $400 million and $410 million, under ASC 606 (previously $370 million and $390 million).

Under ASC 605, the company anticipates revenues to be in the range of $435 million to $440 million (previously $425 million to $435 million).

The Zacks Consensus Estimate for revenues is pegged at $381.11 million.



Following the promising guidance, shares of Universal Display are up 14.3% in the pre-market. Notably, the company’s stock has returned 86% year to date, significantly outperforming the industry's growth of 26%.

Segment Details

Material sales (53.2% of total revenues) inched up 1.2% from the year-ago quarter to $51.8 million. Green emitters sales (including yellow-green emitters) were $40.2 million, up 10.4% year over year. Red emitter sales were $11.4 million, down 21.9% year over year.

Royalty and license fees (44.1% of total revenues) increased 84.4% year over year to approximately $43 million.

Adesis revenues came in at $2.7 million compared with $3 million reported in the year-ago quarter.

Contract research services revenues came in at $2.7 million, representing the remaining 2.7% of total revenues. The figure declined 10.7% year over year.

Operating Details

Gross margin during the quarter under review came in at 82.3%, expanding 310 bps from the year-ago quarter. Material gross margin contracted 250 bps year over year to 70.6%.

Operating expense during the reported quarter came in at $39.4 million, up 11.3% year over year. As a percentage of revenues, the figure came in at 40.4%, contracting from the year-ago figure of 57.6%.

Consequently, operating margin of 41.9% expanded 830 bps on a year-over-year basis.
 

Universal Display Corporation Price, Consensus and EPS Surprise

 

Universal Display Corporation Price, Consensus and EPS Surprise

Universal Display Corporation price-consensus-eps-surprise-chart | Universal Display Corporation Quote

Balance Sheet & Cash Flow

As on Sep 30, 2019, Universal Display had cash and cash equivalents (including short-term investments) of $597.1 million compared with $552.7 million at the end of previous quarter.

The company generated $137.7 million as cash from operating activities for the nine months ended Sep 30, 2019.

The company recently approved a quarterly cash dividend payment of 10 cents per share to be paid on Dec 31, 2019 to shareholders as on Dec 13, 2019.

Zacks Rank & Stocks to Consider

Currently, Universal Display has a Zacks Rank #3 (Hold).

NetEase NTES, Benefitfocus BNFT and Five9 FIVN are some better-ranked stocks in the broader computer and technology sector, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for NetEase, Benefitfocus and Five9 is pegged at 31.93%, 20% and 10%, respectively.

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