IPG Photonics IPGP is scheduled to release third-quarter 2024 results on Oct. 29.

IPGP expects third-quarter 2024 non-GAAP earnings between break-even and 30 cents per share. Revenues are anticipated between $210 million and $240 million.

The Zacks Consensus Estimate for third-quarter earnings is pegged at 19 cents per share, unchanged over the past 30 days, indicating an 83.62% year-over-year decline. The consensus estimate has been unchanged over the past 30 days.

The Zacks Consensus Estimate for revenues is pegged at $227.2 million, indicating a year-over-year decrease of 24.62%.

IPGP has a mixed earnings surprise history. It missed the Zacks Consensus Estimate in two of the trailing four quarters and beat the other two, resulting in an average surprise of 2.65%.

IPG Photonics Corporation Price and EPS Surprise

IPG Photonics Corporation price-eps-surprise | IPG Photonics Corporation Quote

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Let us see how things have shaped up for the upcoming announcement.

IPG Photonics Provides Weak Q3 View

IPGP's lower sales and reduced gross margin significantly impacted its operating income in the second quarter of 2024. Similar trends are expected to have persisted in the third quarter of 2024.

Revenues in the second quarter of 2024 were $257.6 million, down 24% year over year. The gross margin declined 610 basis points (bps) on a year-over-year basis due to higher manufacturing expenses and increased inventory reserves. Unfavorable forex impacted operating income by $3 million.

For the third quarter of 2024, IPG Photonics anticipates a gross margin between 34% and 37%.

Key Factors to Consider for IPG Photonics

IPGP is expected to have suffered from lower materials processing sales due to weakness in cutting and marking applications on soft demand from industrial and e-mobility customers.

IPG Photonics heavily depends on the e-mobility market. Therefore, declining demand in key areas and rising competition are anticipated to have negatively impacted its revenue growth. In the second quarter of 2024, revenues in China dropped 34% due to reduced demand in the general industrial and e-mobility sectors, which are anticipated to have continued in the quarter under review.

The Russia-Ukraine conflict and subsequent sanctions have limited IPG Photonics' ability to use its manufacturing operations in Russia and support its global operations. The EU's additional sanctions significantly impacted the business.

However, IPGP’s to-be-reported quarter is expected to have benefited from improving sales in North America, particularly in medical, 3D printing and advanced applications. Emerging growth products (accounted for 46% of second-quarter total revenues) like LightWELD are expected to have driven revenues in the third quarter of 2024.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the exact case here.

IPGP has an Earnings ESP of 0.00% and a Zacks Rank #4 at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies worth considering, as our model indicates that they possess the right combination of factors to exceed earnings expectations in their upcoming releases:

Check Point CHKP currently has an Earnings ESP of +1.26% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

CHKP shares have gained 34.4% year to date. Check Point is set to report its third-quarter 2024 results on Oct. 29.

Onto Innovation ONTO has an Earnings ESP of +2.74% and a Zacks Rank #2 at present. 

ONTO shares have gained 32.7% year to date. The company is set to report its third-quarter 2024 results on Oct. 31.

Garmin GRMN currently has an Earnings ESP of +1.03% and a Zacks Rank of 2.

GRMN shares have gained 27.8% year to date. Gramin is set to report its third-quarter 2024 results on Oct. 30.

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