Universal Display Reports Q4 Revenue Beat, Inventory Levels Rise
Key Financial Highlights:
* Revenue: $162.3 million, exceeding analyst estimates by 8.7%
* EPS (GAAP): $0.96, missing consensus estimates by 10.8%
* Full-year revenue guidance: $670 million midpoint, 6.4% below analyst estimates
* Operating Margin: 32.3%, down from 40.9%
* Free Cash Flow Margin: 13.6%, down from 18.6%
* Inventory Days Outstanding: 446, up from 418 in the previous quarter
Company Overview
Universal Display (OLED) provides organic light-emitting diode (OLED) technologies for display and lighting applications. The company serves major consumer electronics manufacturers.
Historical Performance
Over the past five years, Universal Display has achieved a 9.8% compounded annual growth rate in sales. While this exceeds the average growth rate for semiconductor companies, the company's recent revenue growth has decelerated to 2.5% over the last two years.
Q4 Performance and Outlook
Universal Display reported modest year-on-year revenue growth of 2.5% in Q4, driven by strong demand for its OLED technologies. However, the company's inventory levels have increased, suggesting potential softness in demand.
Analysts forecast revenue growth of 8.2% over the next 12 months, indicating optimism about the company's future prospects.
Inventory Management
Universal Display's Inventory Days Outstanding (DIO) has risen to 446, above its five-year average, indicating a potential inventory build-up. This may warrant further monitoring to assess demand trends.
Conclusion
Universal Display has delivered a mixed quarterly report, with strong revenue growth but lower profitability and elevated inventory levels. Investors should carefully evaluate the company's long-term growth potential and inventory management practices before making investment decisions.