Advanced Energy Industries, Inc., established in 1981 and headquartered in Denver, Colorado, is a key player in power electronics conversion. AEIS manufactures precision instruments that regulate minute fluctuations in voltage, current, or timing that can reduce the number of semiconductors being produced or even introduce defects. The company has expertise in developing and manufacturing highly regulated power conversion and real-time sensing/control products that directly address these issues.
While this is our Sentiment Idea of the week, a cursory look at the company’s fundamentals is worth a minute. The company has exceeded consensus earnings estimates in seven of the last eight quarters. Its operating cash flow increased by 77% over the past year with free cash flow doubling to $151 million. The company’s gross margin expanded from 33% to 37% and its operating margin more than doubled in the 12 months ended last September, relative to the comparable period ended a year earlier. Unsurprisingly, since we upgraded the company to BUY from SELL last November, the stock has gained 34%. The company now has a market cap of $9.8 billion.
AEIS has an almost perfect Sentiment score of 9.1 (out of 10), which ranks it 93rd among 3,840 US stocks covered by MarketGrader (97th percentile rank). Our sentiment score is calculated from four underlying indicators designed to help you evaluate short-term factors that affect a stock price's behavior in the near term (30 to 60 days); it is most useful when combined with our robust fundamental analysis.
Two of our Sentiment indicator grades for AEIS are worth highlighting. The first one is our Price Momentum indicator, with a current grade of A+. Based on our own proprietary MACD (moving average convergence/divergence) analysis, it is designed to measure the strength in a stock’s recent price performance relative to its longer-term moving averages; currently for AEIS, it is as good as it gets. The other is our Earnings Guidance indicator, where the stock also gets an A+. This indicator measures the rate at which analysts following the stock have been recalibrating their earnings estimates for the company’s next fiscal year. In the case of AEIS, consensus estimates for fiscal year 2026 have risen 16% in the last three months, a very bullish sign that the company is outperforming qualitative analysts’ expectations.
AEIS is also included in some of our best lists of ideas, such as our Best Growth stocks, Best Momentum stocks, and Improving Earnings Guidance stocks.
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