Chip Equipment Shares Bounce Back, Led by Profitable Growers
Semiconductor equipment shares rose 6.3% over the past week, recovering from a 13.8% three-month decline and pushing the group's relative strength near the market's top tier. The article says profitable growers like Teradyne are leading the rebound, supported by high returns on capital and low leverage. Despite elevated valuations, the group's six-month and one-year performance remains strongly positive.
The group’s weighted three-month return was -13.8%, followed by +6.3% in one week and +0.6% in one month. Longer horizons remained positive: +38.4% over six months and +114.3% over a year, with relative strength at 94.6. Weighted ROE was 46.1%, ROIC 56.6%, ROA 22.5%, debt/equity 0.30, and P/E 51.9.
Teradyne stood out: +7.2% weekly, +7.1% monthly, RS 98.3; sales +103.9% and EPS +333.3% year over year. Its ROE was 33.5%, ROIC excluding cash/goodwill 45.6%, debt/FCF 0.0, FCF growth +67.1%, operating margin growth +60.5%. Lam Research gained 9.4% weekly, RS 97.0, sales +30.0%, EPS +36.8%, ROE 58.3%, ROIC 72.0%, operating margin 35.3%, debt/FCF 0.76, after a 16.9% three-month drop.
The rebound may affect investors holding chip-equipment stocks, as elevated valuations could amplify gains or losses if growth expectations shift. Employees and suppliers in the semiconductor supply chain could see steadier orders if capital spending holds up. Broader society may feel indirect effects through chip availability and technology costs, though this group’s moves alone are unlikely to determine those outcomes.