Introduction
Coherent, Inc. (NASDAQ:COHR) is a profitable company operating in the competitive laser industry. The company’s growth occurs in spurts that last for a few years rather than with a continuous growth trend. This leads to volatility with surges and plunges in its stock price.
The laser industry is forecast to grow at around 10% for the next five years, providing an opportunity for Coherent to generate more growth. The stock is reasonably priced with a PE multiple of 13.5x and the trailing PE multiple of 14.5x.
In my opinion the stock would make a good long-term investment as future growth is expected from the laser industry. Coherent’s stock price can be volatile and investors looking to buy the stock need to be aware of this. I think the stock would best suit patient investors, but the stock could also suit active traders looking to trade its price swings.
Financials
Coherent has reported financial results for the first quarter ending December 2018 (data from Seeking Alpha and Yahoo). Note: Fiscal year ends September.
The company’s reported revenue fell 20% from the same quarter last fiscal year. Coherent reported diluted earnings per share of $1.45 which was down 13% from the $1.67 reported for the same quarter last fiscal year. Its EBIT was down 52% for the quarter. The EBIT (Earning Before Tax and Interest) gives an indication of the company’s profitability at an operational level.
On an annual basis Coherent reported a revenue increase of 11% over the previous fiscal year. The annual diluted earnings per share were $9.95 which was up 18% from the $8.42 reported for the previous fiscal year. Its annual EBIT was up 4.1% for the current fiscal year.
The return on equity is currently 19%. The return on equity has ranged from 6% to 19% over the last
