Advanced Energy: Growth And An Impeccable Balance Sheet


  • Advanced Energy is a company that has achieved something rather rare, impressive growth with no long-term debt.
  • The balance sheet is very strong, and cash flow has been equally impressive.
  • When a great company is even slightly undervalued, it can make sense to initiate a position, so we rate the company a buy.

Advanced Energy (NASDAQ:AEIS) is a company that has achieved something rather rare - impressive growth with no long-term debt. The balance sheet is very strong, and cash flow has been equally impressive. Therefore, we think a further dive into this company is warranted.

Business Overview and Outlook

Advanced Energy has been around for over 36 years, focusing on power conversion and control technologies. Its power products enable manufacturing processes that use thin films for various products. These include fabrication processes for semiconductor, flat panel display, data storage products, solar cells, architectural glass, and other advanced product applications. Its remote plasma sources are also used in film processing industries and gas abatement applications. Additionally, the company produces high voltage power supplies for a wide range of applications. Precision optical temperature measurement pyrometers are manufactured for semiconductor and other industrial applications. The company's SCR power controllers are used for industrial manufacturing processes that require exacting material melting, heating, drying, or forming. Advanced Energy also offers PV heaters to warm water from solar power. Finally, the company offers repair services to go along with this array of products.

The market for power conversion solutions is large, and there are many competitors. Advanced Energy has been able to grow by focusing on highly engineered products that solve its customers' toughest problems. The company’s products are sold worldwide to about 200 OEMs and integrators, as well as directly to more than 1,500 end users. Sales to the ten largest customers accounted for 67.7% of sales in 2016. We view it as a negative that the percentage of sales attributed to the top ten customers increased for each of the last three years. Applied Materials (AMAT) is the largest customer and accounted for a rather concerning 35.2% of sales in 2016. Wafer fabrication equipment supplier Lam Research (

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Visit our website: Wall Street for Main StreetAll articles/comments are provided for informational and educational purposes and should not be considered as personalized investment advice. Perform your own due diligence and make your own decisions. Be advised and aware that buying and selling financial instruments involves risk.On the long side, I search for equities trading below their intrinsic value with bright prospects.For the short side, I identify companies burning cash with unattractive business models.Software Engineer Education: - Business Administration (MBA) - BS, Electrical Engineering

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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