What a fantastic six months it’s been for Coherent. Shares of the company have skyrocketed 74.4%, hitting $138.45. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Following the strength, is COHR a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free for active Edge members.
Why Is COHR a Good Business?
Created through the 2022 rebranding of II-VI Incorporated, a company with roots dating back to 1971, Coherent (NYSE: COHR) develops and manufactures advanced materials, lasers, and optical components for applications ranging from telecommunications to industrial manufacturing.
1. Skyrocketing Revenue Shows Strong Momentum
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Coherent grew its sales at an incredible 16.9% compounded annual growth rate. Its growth surpassed the average business services company and shows its offerings resonate with customers.
2. Projected Revenue Growth Is Remarkable
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite, though some deceleration is natural as businesses become larger.
Over the next 12 months, sell-side analysts expect Coherent’s revenue to rise by 14.3%, an improvement versus its 16.9% annualized growth for the past five years. This projection is healthy and indicates its newer products and services will catalyze better top-line performance.
3. EPS Surges Higher Over the Last Two Years
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
Coherent’s EPS grew at an astounding 38.4% compounded annual growth rate over the last two years, higher than its 11.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
These are just a few reasons why Coherent ranks highly on our list, and after the recent rally, the stock trades at 26× forward P/E (or $138.45 per share). Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
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