Ultra Clean Holdings Reaches a 52-Wk High - Analyst Blog

Shares of Ultra Clean Holdings Inc. UCTT touched a new 52-week high of $14.84 during its trading session on Mar 13, the prime impetus being the company's stellar performance in fourth-quarter 2013. The new 52-week high reflects an increase of over $14.71 reached on Mar 12.

Ultra Clean Holdings closed the trading on Mar 13 at $14.44, reflecting a solid year-to-date return of 122.5%. The trading volume for the session was 0.53 million shares. Further upside potential exists for this Zacks Rank #1 (Strong Buy) electrical manufacturing machinery company as can be deduced from its earnings estimate revisions for 2014 and expected earnings growth of 11.5% for the next 5 years.

Growth Drivers

Ultra Clean Holdings posted better-than-expected bottom-line results in fourth-quarter 2013 on Feb 18, 2014. Since then, the shares of the company have spiraled up 20.9%. Earnings per share in the quarter were 26 cents, surpassing the Zacks Consensus Estimate of 23 cents by 13.0%.

Revenues in the quarter increased 40.2% year over year to $126.0 million. Of the total revenues, roughly 93.7% comprised Semiconductor revenues. Revenues generated from international operations were 29.1%. Gross margin increased 430 basis points year over year to 17.1%.      

For first-quarter 2014, Ultra Clean Holdings anticipates revenues to be within the $135–$140 million range and adjusted earnings per share to be within 28–31 cents. At mid-points, the revenue guidance reflects a sequential increase of 9.1% while the earnings guidance is a 13.5% increase over the previous quarter.

Fourth-quarter 2013 results triggered upward revisions in earnings estimates for Ultra Clean Holdings, as discussed below. The earnings growth rate as well as a positive average earnings surprise of 11.8% has made us optimistic about Ultra Clean Holdings' performance in the coming quarters.
 
Estimate Revisions Show Potency

In the last 30 days, the Zacks Consensus Estimate for Ultra Clean Holdings has increased 33.8% to $1.07 for 2014. The estimate also reflects year-over-year growth of 102.4%.

Ultra Clean Holdings is a $413 million company operating in the semiconductor industry. Other stocks worth considering in the industry include Tessera Technologies Inc. TSRA, Canadian Solar Inc. CSIQ and SolarCity Corporation SCTY. While Tessera Technologies and Canadian Solar carry a Zacks Rank #1, SolarCity Corporation holds a Zacks Rank #2 (Buy).