Electro Scientific Industries (NASDAQ:ESIO) shares are moving sharply higher since the start of 2017. ESIO stock gained 243% in the last twelve months, supported by its improving financial numbers. Its stock soared more than 20% in Thursday trading after its preliminary revenue and earnings have beaten analysts’ expectations. Moreover, strong future guidance has also added to traders’ sentiments.
Its stock is currently trading close to $26 a share, just shy from the 52-week high of $27 a share. Nevertheless, Electro Scientific stock offers further upside potential, thanks to its strong fundamentals.
Based on the preliminary results for the third quarter, its revenue is likely to be in the range of $111 million, substantially higher compared to the consensus estimate of $85 million. Moreover, its earnings per share are likely to exceed $0.60 per share in Q3, compared to the consensus of $0.55.
CEO Michael Burger said, “Given the strong third quarter demand, our currently elevated backlog position and our visibility into the current buy cycle, we now expect fourth quarter 2018 and first quarter 2019 revenues to approximate the same level as the third quarter.”
The company has been experiencing a strong demand for its laser-based manufacturing solutions in the microtechnology industry. In the latest quarter, its bookings were hovering in the range of $134M, representing an eye-catching growth of 204% Y/Y.
Although its stock rallied sharply in the last twelve months, future fundamentals and financial numbers suggest further upside. Moreover, the stock also appears as undervalued trading around 3.3 times to sales, relative to the industry average of 4.8 times. Its lower debt to equity ratio of 0.1 and strong free cash flows generation potential also enhances its investment potential in growth opportunities. Overall, the company looks in a solid position to expand its financial numbers at a fast pace, amid the growth of 204% in bookings. Therefore, the stock is likely to get further support.
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