What factors could impact PLAB's future EPS growth?

Photronics' future EPS growth is likely to be influenced by several key factors:

1. Revenue Growth: As indicated by the slight decline of 1.94% in total revenue to $212.14 million in Q1 2025 compared to the previous year, the company's revenue growth trajectory appears to be slowing. Analysts forecast an annualized growth rate of only 1.8% until the end of 2025. This suggests that revenue growth may not be a significant driver of future EPS growth.
2. Operating Expenses: The impact of operating expenses on EPS cannot be overlooked. If Photronics manages to control costs effectively, it could lead to improved margins and, consequently, higher EPS. Conversely, if costs increase due to factors such as inflation or operational inefficiencies, EPS could be negatively affected.
3. Share Buybacks: Photronics' history of share buybacks, as indicated by the cash returned to shareholders through share repurchases of $4.6 million in Q1 2025, suggests a commitment to returning value to shareholders. Buybacks can boost EPS by reducing the number of shares outstanding, making the remaining shares more valuable.
4. Technological Innovation and Market Leadership: Photronics' focus on innovation and its position as a leader in photomask technologies could position it well for future growth. If the company can continue to develop new, high-value products and services, it may see increased profitability and EPS growth.
5. Market Demand and Trends: The company's optimism about favorable photomask demand trends driven by megatrends such as AI, supply chain regionalization, and edge computing could positively influence EPS growth if these trends materialize.
6. Foreign Exchange Fluctuations: As a global company with operations in various regions, Photronics is exposed to foreign exchange risks. Fluctuations in exchange rates could impact the company's financial results, including EPS, particularly if there are significant changes in currency values relative to the US dollar.

In conclusion, while Photronics faces some headwinds in terms of revenue growth and market trends, its focus on cost management, share buybacks, and technological innovation could mitigate these effects and support future EPS growth. The company's ability to navigate these factors will be critical in determining its EPS trajectory.