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Vishay (VSH) Up 12.4% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Vishay Intertechnology (VSH). Shares have added about 12.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Vishay due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Vishay's Q1 Earnings & Revenues Up Y/Y

Vishay Intertechnology delivered first-quarter 2023 adjusted earnings of 79 cents per share, surpassing the Zacks Consensus Estimate by 38.6% and rising 11.3% year over year.

Revenues of $871.05 million increased 2% year over year. The figure surpassed the Zacks Consensus Estimate of $848.05 million.

The strong performance of MOSFETS, resistor and capacitor product lines drove year-over-year revenue growth in the reported quarter.

However, softness in diodes, optoelectronics and inductors was a concern.

Vishay’s book-to-bill ratio was 0.84 at the end of the first quarter.

Product Segments in Detail

Resistors: The segment generated revenues of $223.14 million (25.6% of the total revenues), up 7.8% year over year.

Inductors: The product line generated revenues of $80.34 million (9.2% of the total revenues), which decreased 2.9% on a year-over-year basis.

MOSFET: The product line generated revenues of $198.2 million (22.8% of the total revenues), increasing 14.8% year over year.

Capacitors: The product line generated revenues of $133.3 million (15.3% of the total revenues), up 4.2% year over year.

Diodes: The segment generated revenues of $175.7 million (20.2% of the total revenues), down 3.6% from the year-ago quarter.

Optoelectronics: The product line generated revenues of $60.4 million (6.9% of the total revenues) in the reported quarter. The figure was down 25.4% from the year-ago quarter.

Operating Details

In first-quarter 2023, the gross margin was 32%, expanding 170 basis points (bps) on a year-over-year basis.

Selling, general and administrative expenses were $120.1 million, increasing 6.5% year over year. As a percentage of total revenues, the figure expanded 60 bps from the year-ago quarter to 13.8%.

The operating margin expanded 110 bps on a year-over-year basis to 18.2%.

Balance Sheet & Cash Flows

As of Apr 1, 2023, cash and cash equivalents were $847.5 million, up from $610.8 million as of Dec 31, 2022.

Long-term debt was $566.8 million at the end of first-quarter 2023 compared with $500.9 million at the end of fourth-quarter 2022.

The company generated $112.2 million in cash from operations in the reported quarter, down from $166.5 million in the previous quarter.

In the first quarter, capital expenditures were $45.6 million. Also, free cash flow was $84.6 million.

Guidance

For second-quarter 2023, Vishay expects total revenues of $860-$900 million.

VSH anticipates a second-quarter gross margin of 29% (+/-50 bps).

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How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted 11.73% due to these changes.

VGM Scores

At this time, Vishay has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Vishay has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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