AXCELIS TECHNOLOGIES INC (NASDAQ:ACLS) – A Quality Stock in the Semiconductor Space

AXCELIS TECHNOLOGIES INC (NASDAQ:ACLS) stands out as a potential candidate for quality investors, particularly those focused on long-term holdings in the semiconductor equipment sector. The company’s strong fundamentals, including high profitability, efficient capital allocation, and solid financial health, make it a compelling option for investors seeking durable businesses.

Key Strengths

• High Return on Invested Capital (ROIC): ACLS boasts an impressive ROIC of 29.2%, well above the 15% threshold typically sought by quality investors. This indicates efficient use of capital to generate profits.
• Strong EBIT Growth: The company has delivered a 54.2% 5-year EBIT growth rate, reflecting expanding profitability in its core operations.
• Low Debt Burden: With a Debt-to-Free Cash Flow ratio of just 0.35, ACLS could theoretically repay all its debt in less than half a year using current cash flows—a sign of financial resilience.
• Profit Quality: ACLS converts nearly 100% of its net income into free cash flow, demonstrating high earnings quality and efficient cash generation.

Fundamental Analysis Summary

Our fundamental report assigns ACLS a rating of 7 out of 10, with particularly strong scores in profitability and financial health. Key takeaways include:

• Profitability: The company outperforms most peers in Return on Assets (13.35%) and Return on Equity (17.43%).
• Valuation: While priced reasonably with a P/E of 13.2, forward earnings estimates suggest a slightly higher valuation, which may be justified by expected earnings growth.
• Growth: Despite a recent dip in revenue, long-term growth trends remain solid, with analysts forecasting continued earnings expansion.

For investors interested in similar quality stocks, our Caviar Cruise screener provides additional candidates meeting these criteria.

Disclaimer

This is not investing advice. Always conduct your own research before making investment decisions.