Photronics (PLAB) Share Price Surges 150% in Five Years, but EPS Growth Lags Behind

Photronics (NASDAQ:PLAB) investors have seen returns of 150% over the past five years, with a compound earnings per share growth of 26%. However, the stock's price has only grown at a 20% yearly rate. Despite this, long-term shareholders have made a 20% annual gain over the past five years.

Photronics Inc (NASDAQ:PLAB) reported its third-quarter (Q3) 2025 earnings, showcasing a flat revenue of $210 million, both year-over-year (YOY) and sequentially [1]. The company's non-GAAP diluted earnings per share (EPS) came in at $0.51, surpassing guidance, while the operating margin stood at 23%, above the expected range. The strong performance was driven by a robust flat panel display (FPD) business, which saw a 14% YOY increase in revenue to $63 million.

Despite the flat revenue, Photronics' integrated circuits (IC) revenue declined by 5% YOY, with mainstream IC revenue falling by 12%. The company attributed this decline to challenging market conditions and geopolitical trade restrictions, which have muted demand in the Asia region [1]. However, Photronics is leveraging its strong balance sheet, with $576 million in cash and short-term investments, to invest in business expansion and advanced technologies.

The company expects fourth-quarter (Q4) revenue to be slightly lower, ranging between $201 million and $209 million, due to fewer operational days. The Q4 operating margin is expected to be between 20% and 22%, while the non-GAAP diluted EPS is projected to be between $0.42 and $0.48 per share [1].

Photronics' capital expenditures (CapEx) for fiscal 2025 are expected to be $200 million, focusing on advanced-node tools, U.S. production expansion, and end-of-life tool replacements. The company anticipates elevated CapEx for the next three years, impacting cash flow and requiring strategic resource allocation [1].

Investor Implications:
Photronics' stock has seen a 150% return over the past five years, with a compound EPS growth of 26%, but the stock price has only grown at a 20% yearly rate. Despite this, long-term shareholders have made a 20% annual gain over the past five years. The Q3 2025 earnings report indicates that while the company is facing challenges in the IC market, it is well-positioned to capitalize on growth opportunities in the FPD market and advanced technologies. However, investors should remain cautious about the near-term demand environment due to geopolitical uncertainty.

References:
[1] https://sg.finance.yahoo.com/news/photronics-inc-plab-q3-2025-070358288.html
[2] https://www.ainvest.com/news/photronics-q3-2025-earnings-call-contradictions-emerge-trade-restrictions-mask-capacity-tool-replacements-2508/