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II-VI Incorporated: Strengths Outweigh Weakness

Mar. 06, 2018 9:57 AM ETCoherent Corp. (COHR)4 Comments
Gordon MacLean profile picture
Gordon MacLean


  • Strong key metrics.
  • Strengths outweigh any weakness.
  • Analysts have shares trading at a big discout.
  • Share price provides for low risk entry with massive upside potential.

The company

II-VI Incorporated (IIVI) develops and manufactures engineered materials and optoelectronic components through three segments, II-VI Laser Solutions, II-VI Photonics and II-VI Performance Products. Products from all three segments are used in industrial materials processing, optical communications, military uses, consumer electronics, semiconductor equipment, life science and automotive applications, according to the company's most recent 10-K. The company's strengths can be seen in their ability to manage debt and expand their margins. With a current share price of $38.10, I believe IIVI is trading at a huge discount.


Revenue for IIVI continues to come in higher YoY greatly exceeding the industry average. In the most recent quarter, revenue grew 21.42% from the same quarter a year ago. This has been the continued trend for the company as their full-year 2017 revenue grew 17.51% from the previous year. Although this has seemed to been trickling down, the rate of bottom line growth has seemed to slow as YTD, EPS has grown -2.78% and 5.41% in Q1 and Q2 compared to 33.33% and 23.33% in 2017. FY 2017 EPS grew 11.28% compared to 41.49% for 2016.

As of their most recent quarter, IIVI has a debt-to-equity value of .50 which shows successful debt management when compared to the industry. The company also has a quick ratio of 2.71, showing that the company is able to cover short-term debt quickly and efficiently.

Operating margins are high at 12.3% as of the most recent quarter and EBITDA margins are greatly exceeding the rest of the industry at 19.2%

Strengths and weaknesses

Clearly the company has shown that they know how to manage their financials by posting low debt-to-equity ratios while simultaneously growing revenues and expanding their profit margins. Their ROE as of the end of 2017 is 3.7%, which is well above their peers. On top

This article was written by

Gordon MacLean profile picture
My principal strategy involves conducting technical analysis to search for and identify key patterns which reveal opportunities for me to capitalize on short-term price action of an asset. Once a pattern is identified, a rigorous analysis of the company's financial health and overall business allows me to identify company's that qualify for an addition to my value portfolio as a longer-term holding, beyond my initial short-term horizon based off of the technical analysis done in phase 1 of my research.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in IIVI over 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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