Why Photronics Stock Ripped Higher Today

Photronics (NASDAQ: PLAB) stock, which makes "photomasks" (devices for laying out circuit designs on semiconductor wafers) for the semiconductor industry, shocked investors with a big earnings beat this morning -- and the stock is up 46.5% as of 9:45 a.m. ET.

Analysts forecast Photronics would earn only $0.44 per share on $204.5 million in Q4 2025, but the company actually earned $0.60 per share, with sales of $215.8 million.

Photronics Q4 earnings

And this was only the start of the good news. Although Photronics suffered something of a sales slump in Q4 (and indeed, all year long), with sales falling 3% for the quarter and 2% for the year, earnings took a great leap forward.

As calculated according to generally accepted accounting principles (GAAP), Photronics earned $1.07 per share in Q4, nearly twice last year's Q4 profit and even more money than the non-GAAP number noted above. For the year, Photronics earned $2.28 per share, up 9% despite the sales decline, and again, more money than you'd expect from the non-GAAP results.

CEO George Macricostas called these "very good results ... with particular strength in the United States," and an expansion of the business in South Korea.

Is Photronics stock a buy?

Looking ahead to Q1 of the new fiscal year, Photronics expects to earn between $0.51 and $0.59 per share (non-GAAP) on sales of between $217 million and $225 million.

All of these numbers are well ahead of analyst forecasts, but even here, the news gets better. Even before growing to earn what it says it's going to earn this year, Photronics stock trades for less than 17 times earnings. With profits continuing to grow steadily, this looks like a good price at which to buy.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.