IPGP - Embedded Expectations Analysis - 2021 09 16
IPG Photonics Corporation (IPGP:USA) currently trades above historical averages relative to UAFRS-based (Uniform) earnings, with a 24.6x Uniform P/E. At these levels, the market is pricing in bullish expectations, but management may have concerns about electric vehicle (EV) growth opportunities, laser technology capabilities, and their innovation investments.Specifically, management may lack confidence in their ability to continue focusing on innovation and sustain increased sales volumes, particularly from European customers. In addition, they may have concerns about supply chain constraints, the reliability of their lasers, and the durability of secular environmental trends. Furthermore, management may be overstating the strength of the competitive position and capabilities of their products, as well as the opportunities in the electric vehicle market. Finally, they may also lack confidence in their ability to sustain increased adjusted motor beam (AMB) laser sales, and they may be exaggerating their utility in electric vehicle battery welding applications.
IPG Photonics is a developer and manufacturer of a line of fiber lasers, fiber amplifiers and diode lasers that are used in various applications, primarily in materials processing. The company designs and manufactures a range of optical fiber-based lasers and amplifiers. The company also makes packaged diodes, direct diode lasers, laser systems and communications components and systems. A majority of the company's products are designed to be used as general-purpose energy or light sources.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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