Fiber laser manufacturers have been quite the hot commodity on the stock market as of late. From complex materials processing to life-saving medical uses to something as common as telecommunication, fiber lasers play an essential role in several major industries the world over.
While nLight is a younger company than IPG Photonics, the latter generates much more in revenue annually, but could the underdog have greater upside? To find out, let’s take a look at the financials, forecasts, and strategies for nLight and IPG Photonics.
nLight Financials vs. IPG Photonics Financials
The financial metrics for nLight have been improving and are impressive. The firm reported revenue of $69.1 million for the second quarter of 2021. This is an increase of 32.6% compared to the company’s second quarter of 2020, which was $52.1 million.
Furthermore, nLight’s gross margin for Q2 of 2021 was 29.4% — compare this to the company’s Q2 of 2020, which was just 25%.
The GAAP net loss for Q2 2021 was -$7.9 million, or -$0.18 per share, compared to Q2 of 2020, which saw a GAAP net loss of -$6.8 million, or -$0.18 per share.
Comparatively, IPG Photonics saw a revenue of $372 million for its second quarter of 2021. This number represents a 25% increase year over year for IPG Photonics.
Likewise, the company’s operating income rose from $47.2 million in Q2 of 2020 to $92.3 million by Q2 of 2021 — nearly doubling over the course of a single year.
These figures factor into the increased earnings per share (EPS) that IPG Photonics investors have enjoyed for Q2 of 2021, which went up to $1.29 from $0.71 in Q2 of 2020.
Both companies financial metrics are improving but how do the forecasts for both nLight and IPG Photonics compare?
nLight’s Forecast Vs IPG Photonics’ Forecast
Bullish analysts see nLight stock increasing from its current price per share of under $29 up to $50 per share, while other less optimistic analysts forecast the price per share increasing to only $33 a share by this time next year. The median estimate comes out to be $39.50, which represents significant upside still.
The best case price per share for IPG Photonics according to a poll of analysts is $260 per share over the next twelve months, while the more modest estimates come out to be closer to $190 per share a year from now.
Looking at the median estimate of $220.50, it’s clear to see that IPG Photonics, like nLight, is going to be on the up-and-up over the next twelve months — just how much remains to be seen, but the consensus is overwhelmingly positive for both companies.
How China Impacts nLight Stock vs IPG Photonics
A major factor that plays an enormous role in how nLight and IPG Photonics stocks perform is the fiber laser market in China. While both companies used to put a lot of time and energy into the market in China, nLight and IPG Photonics have been forced to go back to the drawing board and come up with new marketing strategies
Sales in China have been choppy as of late, which has resulted in both companies having to look elsewhere to make up for any loss of business.
nLight has found increased success by shifting focus to non-China industrial and aerospace markets, while IPG Photonics has seen great success by pivoting toward European markets.
Another way that nLight and IPG Photonics are working to inch past the other is through the development and release of new products.
Both companies are working diligently to create innovative and groundbreaking new technologies for the fiber laser industry. For nLight, this includes the AFX product line. For IPG Photonics, this includes investing in new industries such as electric vehicles that can utilize the company’s already existing suite of products.
nLight Stock vs IPG Photonics: Who Has the Greater Market Cap?
nLight is the David to IPG Photonics’ Goliath when it comes to size. Most recently, nLight’s market cap was $1.243 billion, while IPG Photonics’ market cap was $8.911 billion.
Both of these market caps have dipped significantly since February of 2021: nLight’s was $1.788 billion and IPG Photonics’ was $13.82 billion, but both have dropped quite a bit since.
From a discounted cash flow forecast perspective, IPG Photonics has upside opportunity to the tune of $223 per share, representing 34% growth from current levels.
nLight on the other hand has upside to $41 per share, which represents a 42% upside potential using a cash flow forecast analysis. As such, the upside win goes to LASR but as a smaller company variations in reporting are more likely to cause wilder price gyrations. In short, more reward potential but more risk potential too.
The Bottom Line: The nLight Stock vs IPG Photonics
When all is said and done, despite both companies showing great promise in the world of fiber laser manufacturing, the answer to who is best in the battle of nLight stock vs IPG Photonics seems pretty apparent now: it’s IPG Photonics.
With better financials and a more promising forecast, a higher market cap, and a decade of additional experience over nLight, it seems very reasonable to argue that IPG Photonics is the better stock.
That’s not to say that nLight isn’t also a reasonable investment, though — in addition to having a lower price per share, nLight also has the chance to see plenty of positive quarters in its future, as well. IPG Photonics stock costs significantly more, but the potential returns certainly seem worth the price.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.