Why Camtek Stock Was Plunging This Week

Key Points

• The company broadly met analyst expectations in the second quarter, but investors weren't impressed.

• This, despite the double-digit growth rates in both revenue and profitability.

• 10 stocks we like better than Camtek ›

According to data compiled by S&P Global Market Intelligence, Camtek's (NASDAQ: CAMT) share price had eroded by nearly 15% week to date as of early Friday morning. Investors were reacting to the semiconductor inspection equipment and measuring company's latest set of quarterly results, which they didn't find inspiring.

Good, but not good enough

For its second quarter, Camtek notched a new all-time high revenue figure of just over $123 million. This was 20% higher year over year. Non-GAAP (adjusted) net income rose at nearly the same pace, advancing 19% to almost $39 million, or $0.79 per share.

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Image source: Getty Images.

Camtek operates in the semiconductor industry, which has seen considerable investor interest on the back of the relentless growth of artificial intelligence (AI) functionalities. In light of that, the market likely found it disappointing that the company only met the average analyst estimate for adjusted profitability while scoring a slight beat on the consensus revenue projection of just under $122 million.

In its earnings release, Camtek said it is focused on AI, with its advanced packaging segment in particular gearing to service components used in the technology. In management's view, the stepped-up computing power requirements for AI should spur demand for the company's inspection and measuring tools.

Double-digit increase expected for the third quarter

Camtek also published rather spare guidance for its current (third) quarter. It's expecting to earn $125 million for the period, which if achieved would represent year-over-year growth of 11%. The fact that this figure is well below that of the second quarter was probably worrying to more than a few of the company's investors.

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Eric Volkman 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.