One-glance verdict
Undervalued
$141.07 our estimate vs market $71.81
Wall Street consensus: $124.14 (-12.0% lower than our fair-value estimate)
49% below our estimate, below the bear case
Fundamentals snapshot
IPG Photonics Corporation
IPGP · NMS · Technology · Semiconductor Equipment & Materials
Current price
$71.81
52-week range
$68.27 - $155.82
Market cap
$3.05B
Balance sheet
Healthy
0.77x Concerning
Net cash $855.06M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 6.5% last year.
- Reward Returns 1.3% on equity, ahead of 33% of its peers.
- Risk Stock trades 100.4% above its 5-year average P/E.
- Risk Operating margin compressed from 16.2% to 5.9% over 3 years.
What this company does
IPG Photonics Corporation
IPG Photonics makes powerful fiber lasers used in everything from making cars to medical devices, and their main money comes from selling these lasers to other businesses. This matters because their specialized lasers are key tools for manufacturing, meaning their sales show how much these industries are investing in new equipment.
How the company got here
IPG Photonics was founded in 1990 by Valentin Gapontsev, a Russian scientist who saw the potential of fiber lasers. The company pioneered the development of high-power fiber lasers, which are more efficient and reliable than traditional lasers. This innovation allowed IPG to become a leader in the laser technology market, particularly for industrial applications. Over the years, IPG has expanded its product offerings and global reach, solidifying its position as a key player in the advanced manufacturing and technology sectors.
What it actually does
IPG Photonics designs, manufactures, and sells advanced laser systems. Think of these lasers as highly specialized light beams used for cutting, welding, marking, and even medical procedures. Instead of a bulky, complex machine, IPG's lasers are often compact and efficient, making them ideal for integration into various manufacturing processes. Their technology is crucial for industries that require precision and speed in their production lines, from making car parts to implantable medical devices.
Laser Products
This is IPG's core business, where they sell a wide variety of fiber lasers and amplifiers. These lasers are the engines that power many industrial machines. Customers, like car manufacturers or electronics makers, buy these lasers to use in their own equipment for tasks such as cutting metal with incredible precision or welding components together. This segment represents the largest portion of IPG's revenue, as it's the fundamental technology the company is known for.
Laser Systems
Beyond just selling the laser itself, IPG also offers complete laser-based systems. These are ready-to-use solutions designed for specific applications, like a handheld laser welder for small repairs or a compact cutting system for flat sheets of metal. These systems are often sold to smaller businesses or for specialized tasks where a full industrial setup isn't necessary. This segment is a smaller but important part of IPG's business, offering more integrated solutions to a broader customer base.
What management is betting on now
IPG Photonics is focusing on expanding the use of its lasers into new and growing markets, such as medical technology and advanced manufacturing. They are also investing in developing lasers with new wavelengths (colors of light) and capabilities to tackle more complex tasks. The company aims to increase its sales of integrated laser systems, making it easier for customers to adopt their technology. This strategy is about staying ahead of the curve by innovating and finding new applications for their core laser expertise.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$42.97M
FY2024 Q4
$50.62M
FY2025 Q1
$-11.37M
FY2025 Q2
$-17.57M
FY2025 Q3
$14.57M
FY2025 Q4
$10.92M
FY2026 Q1
$-21.77M
FY2026 Q2
$17.08M
Revenue
$278.58M
Net income
$5.24M
Diluted EPS
0.12
Operating cash flow
$37.79M
Free cash flow
$17.08M
Fetching…
Sources
Revenue
$265.50M
Net income
$1.58M
Diluted EPS
0.04
Operating cash flow
$-5.46M
Free cash flow
$-21.77M
Fetching…
Sources
Revenue
$274.47M
Net income
$13.27M
Diluted EPS
0.30
Operating cash flow
$28.81M
Free cash flow
$10.92M
Fetching…
Sources
Revenue
$250.79M
Net income
$7.46M
Diluted EPS
0.18
Operating cash flow
$35.31M
Free cash flow
$14.57M
Fetching…
Sources
Revenue
$250.72M
Net income
$6.61M
Diluted EPS
0.16
Operating cash flow
$-2.22M
Free cash flow
$-17.57M
Fetching…
Sources
Revenue
$227.79M
Net income
$3.76M
Diluted EPS
0.09
Operating cash flow
$13.45M
Free cash flow
$-11.37M
Fetching…
Sources
Revenue
$234.34M
Net income
$7.82M
Diluted EPS
0.27
Operating cash flow
$73.78M
Free cash flow
$50.62M
Fetching…
Sources
Revenue
$233.14M
Net income
$-233.59M
Diluted EPS
-5.33
Operating cash flow
$66.06M
Free cash flow
$42.97M
Fetching…
Sources
Is it cheap or expensive?
Fair value $141.07 vs current price $71.81
Wall Street consensus is the average analyst price target: $124.14 (-12.0% lower than our fair-value estimate).
Our most-likely fair value is $141.07 a share — about 96.5% above today's price of $71.81, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $855.1M - more cash than debt. Interest coverage 0.8x.
Net debt
$-855.06M
Interest coverage
0.77x
IPG Photonics Corporation's profit covers its interest bill about 0.8 times over. and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
IPGP
BASELINE
IPG Photonics Corporation
Total debt $16.25M Interest coverage 0.77x This is the baseline the peer rows are being compared against.
Total debt $3.55B Interest coverage 4.74x +514% vs IPGP Carries about 6.1x more debt cushion than IPGP.
Total debt $1.67B Interest coverage 24.60x +3,085% vs IPGP Carries about 31.8x more debt cushion than IPGP.
Total debt $14.84M Interest coverage -22.33x -100% vs IPGP This peer has almost no interest-payment cushion compared with IPGP.
Total debt $4.19B Interest coverage 2.48x +221% vs IPGP Carries about 3.2x more debt cushion than IPGP.
Total debt $285.60M Interest coverage 5.43x +604% vs IPGP Carries about 7.0x more debt cushion than IPGP.
What you should know
The case for and against IPGP
3 Rewards
2 Risks
Rewards
-
Revenue grew 6.5% last year.
-
Returns 1.3% on equity, ahead of 33% of its peers.
-
Free cash flow was positive in 9/10 years.
Risks
-
Stock trades 100.4% above its 5-year average P/E.
-
Operating margin compressed from 16.2% to 5.9% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
110.48x
Forward P/E
31.13x
P/B
1.44x
P/S
2.86x
EV/EBITDA
20.77x
PEG ratio
1.83x
Profitability
How much profit each dollar creates
Gross margin
37.9%
Operating margin
5.9%
Net margin
2.6%
ROE
1.3%
ROA
1.0%
Health
Liquidity and balance-sheet strength
Debt / equity
0.01x
Current ratio
6.18x
Quick ratio
4.42x
Total debt
$16.25M
Total cash
$871.32M
Growth
How the business has been compounding
Revenue TTM
$1.07B
Revenue 5Y CAGR
-9.0%
EPS TTM
0.65
EPS 5Y CAGR
-30.3%
Cash flow
How much cash the business throws off
Operating CF TTM
$96.44M
Free CF TTM
$-3.45M
FCF margin
-0.3%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
2012-12-19