Advanced Energy Industries, Inc: Market-Trouncing Tech Stock Announces Quarterly Dividend

Advanced Energy Stock Up 43% Since November

Advanced Energy Industries, Inc. (NASDAQ:AEIS) is a great tech stock that was doing well before COVID-19 kicked the broader market over a cliff in February and March.

That might explain why AEIS stock been doing so well during the rebound. Since it was a great stock before the sell-off, it likely remains a great stock.

Between the start of 2019 and the middle of February 2020, Advanced Energy Industries stock climbed 86.5%.

And thanks to the company’s solid financial results throughout the economic downturn, including record second- and third-quarter results, as well as strong guidance, AEIS stock was able to rebound quicker than most.

By August, Advanced Energy Industries stock had erased all of its losses associated with the coronavirus pandemic, and it continues to trade at record levels. The stock is up 43.6% year-over-year, 38.5% in 2020, and 212% since bottoming in March.

I actually looked at Advanced Energy Industries, Inc. not that long ago. In early November, AEIS stock was trading at $83.05 and was advancing on record third-quarter results.

Since then, the share price has continued to climb even higher. In fact, since the start of November, Advanced Energy Industries stock has climbed an impressive 43.6%.

Those are notable gains already, but the outlook for AEIS stock is even brighter.

Chart courtesy of StockCharts.com

AEIS Stock Overview

Advanced Energy Industries designs and manufactures highly engineered, precision power conversion, measurement, and control solutions. (Source: “Powering the 4th Industrial Revolution: Summer 2020,” Advanced Energy Industries, Inc., last accessed December 22, 2020.)

A leader in the fourth industrial revolution (the automation of manufacturing and industrial practices with modern smart technology), Advanced Energy Industries is responsible for the world’s most advanced power supplies and solutions for a wide range of industries, including the semiconductor equipment, manufacturing, telecommunications, data center, and medical industries.

The company has also been targeting the 5G sector, now that growth has returned to the wireless infrastructure sector. From 2017 to 2022, wireless infrastructure spending is expected to increase at a compound annual growth rate of 105%.

Advanced Energy Industries, Inc. Initiates Quarterly Dividend Program

Advanced Energy Industries provides buy-and-hold investors with strong capital appreciation. And thanks to the company’s strong balance sheet, it now provides those same investors with passive income. (Source: “Advanced Energy Announces Initiation of Quarterly Dividend Program,” Advanced Energy Industries, Inc., December 14, 2020.)

On December 14, the company announced that its board of directors approved the initiation of a cash dividend program. The regular quarterly payout currently stands at $0.10 per share, and will start in the first quarter of 2021.

Yuval Wasserman, the company’s president and CEO, noted, “We believe the initiation of a quarterly cash dividend program demonstrates confidence in our strategy and our commitment to consistently return capital to shareholders and enhance shareholder value.” (Source: Ibid.)

Record Q3 Revenue

In early November, Advanced Energy Industries announced that its revenue for the third quarter increased 122% year-over-year and 14.5% sequentially to a record $389.5 million. (Source: “Advanced Energy Announces Third Quarter 2020 Results,” Advanced Energy Industries, Inc., November 5, 2020.)

Third-quarter net income from continuing operations was up 524% year-over-year and 55.6% sequentially, to a record $45.6 million ($1.18 per share). Adjusted net income was up 205% year-over-year and 40.5% sequentially, to $63.8 million ($1.66 per share).

The company generated a record $67.5 million of operating cash from continuing operations in the third quarter and it made $4.4 million in principal debt payments.

For the fourth quarter, Advanced Energy Industries, Inc. expects to report:

• Revenue in the range of $350.0 to $370.0 million, versus $338.3 million in Q4 2019
• Earnings from continuing operations of $1.03 (plus or minus $0.21), versus $0.27 in Q4 2019
• Adjusted earnings of $1.30 (plus or minus $0.20), versus $0.87 in Q4 2019

Analyst Take

Advanced Energy Industries stock was a great tech stock before the pandemic sent the market reeling—and it still is. Moreover, with the rollout of 5G still in its infancy, the company’s outlook continues to be bullish.

Advanced Energy Industries, Inc. recently reported an exceptional quarter with record revenue, earnings, and cash-flow generation. All of which validates the company’s long-term business model and strategy.  It also positions the company to grow faster than the markets it serves and to achieve or exceed its own strategic goals.