ACM Research ACMR is scheduled to report fourth-quarter 2024 results before market open on Feb. 26.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

For the fourth quarter, the Zacks Consensus Estimate for revenues is pegged at $188.17 million, indicating growth of 10.48% from the year-ago quarter’s reported value.

The Zacks Consensus Estimate for earnings is pegged at 26 cents per share, suggesting a fall of 39.53% from the year-ago figure. The figure has been unchanged over the past 30 days.

ACM Research’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 151.52%.

Let’s see how things have shaped up before the announcement.

Factors to Consider for ACMR Ahead of Q4

ACMR expects strong demand for semiconductor tools in the fourth quarter of 2024, particularly in the foundry, logic, power, and memory sectors, driven by advancements in AI and the overall semiconductor market.

Strength in semiconductor fabrication supported by a strong cleaning portfolio, front-end processing tools and differentiated technology is likely to have driven ACM Research’s top-line growth in the fourth quarter.

ACMR anticipates that wafer fabrication equipment spending in mainland China will remain high, driven by the country’s goal to match production capacity with end-market consumption. This is expected to support market share gains, especially in cleaning and new product areas in the to-be-reported quarter.

The company is expected to see further contributions from its new products, particularly the Ultra C Tahoe, which has already entered mass production and is being evaluated by additional customers. Tahoe’s enhanced cleaning performance and environmental benefits position it as a strong offering for AI chip production.

ACM Research’s latest technological innovations, coupled with increasing market share gain across the United States, Korea and Taiwan, and mainland China are expected to have boosted ACMR’s fourth-quarter performance.

However, ACMR is expected to have faced significant challenges in the fourth quarter due to macroeconomic uncertainties and increasing competition in the semiconductor industry. The slowdown in China’s advanced packaging market remains a concern, while U.S. export restrictions pose an additional headwind.

ACMR Shares Trading Cheap

ACM Research shares are cheap, as suggested by a Value Score of B.

The ACMR stock is trading at a significant discount with a forward 12-month P/S of 1.61X compared with the sector’s 6.45X.

Price/Sales (F12M)

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ACMR shares have surged 57.5% in the year-to-date period, outperforming the Zacks Computer & Technology sector’s return of 0.9%.

Year-to-Date Performance

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ACMR shares have outperformed its peers, including Applied Materials AMAT, Lam Research LRCX and Tokyo Electron TOELY. These companies remain key competitors in the semiconductor equipment industry, particularly in wafer cleaning, deposition, and other critical fabrication processes.

AMAT, LRCX and TOELY shares have returned 5.8%, 19.1% and 10.8%, respectively, in the year-to-date period.

ACMR’s Prospects Rides on Strong Portfolio

ACMR’s cleaning business, which comprises single wafer cleaning, Tahoe and semi-critical clinical equipment, is used in 90% of all cleaning process steps. ACM Research’s top-to-bottom cleaning portfolio helps address a significant part of the market, which is worth roughly $6 billion.

Improving demand for sulfuric acid peroxide mixing (SPM) offering, which represents roughly 25% of the total front-end cleaning market, is helping ACMR gain market share in cleaning. The company remains on track to become the second only supplier of commercial high temperature SPM cleaning globally.

To expand its portfolio in the third quarter of 2024, ACMR launched the Ultra C bev-p Panel Bevel Etching Tool for panel-level packaging applications, designed for bevel etching and cleaning in copper-related processes, with the capability to handle both front and back side etching within a single system, enhancing process efficiency and product reliability.

ACMR is expected to benefit from increasing shipments of its ACP furnace to other memory and analog customers. ACM Research anticipated having 17 furnace customers by the end of 2024, up from 9 at the end of 2023. The company expects the contribution to revenues from the furnace to accelerate in 2025.

Conclusion

Despite strong revenue growth and market share gains driven by its robust cleaning portfolio and technological advancements, ACMR faces challenges from macroeconomic uncertainties, increasing competition, and U.S. export restrictions, which could impact its near-term performance.

ACM Research currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a favorable time to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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