Buy or Sell Ichor Stock?

Ichor (ICHR) stock has jumped 33% during the past day and is currently trading at $45.27. We believe there are several things to fear in ICHR stock given its overall Weak operating performance and financial condition. This is aligned with the stock’s Low valuation because of which we think it is Fairly Priced.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $1.6 Bil in market cap, Ichor provides design, engineering, and manufacturing of gas and chemical fluid delivery subsystems for semiconductor capital equipment, serving OEMs through direct and reseller channels.

[1] Valuation Looks Low

This table highlights how ICHR is valued vs broader market. For more details see: ICHR Valuation Ratios

[2] Growth Is Inconsistent

• Ichor has seen its top line shrink at an average rate of -7.1% over the last 3 years
• Its revenues have grown 17% from $819 Mil to $957 Mil in the last 12 months
• Also, its quarterly revenues grew 13.3% to $239 Mil in the most recent quarter from $211 Mil a year ago.

This table highlights how ICHR is growing vs the broader market. For more details see: ICHR Revenue Comparison

[3] Profitability Appears Very Weak

• ICHR last 12 month operating income was $-27 Mil representing operating margin of -2.8%
• With cash flow margin of 1.9%, it generated nearly $18 Mil in operating cash flow over this period
• For the same period, ICHR generated nearly $-41 Mil in net income, suggesting net margin of about -4.3%

This table highlights how ICHR profitability vs broader market. For more details see: ICHR Operating Income Comparison

[4] Financial Stability Looks Strong

• ICHR Debt was $163 Mil at the end of the most recent quarter, while its current Market Cap is $1.6 Bil. This implies Debt-to-Equity Ratio of 10.7%
• ICHR Cash (including cash equivalents) makes up $93 Mil of $967 Mil in total Assets. This yields a Cash-to-Assets Ratio of 9.6%

[5] Downturn Resilience Is Very Weak

ICHR has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and (b) how quickly it recovered.

2022 Inflation Shock

• ICHR stock fell 65.1% from a high of $62.18 on 5 April 2021 to $21.69 on 20 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $45.48 on 15 February 2024 , and currently trades at $45.27

2020 Covid Pandemic

• ICHR stock fell 62.6% from a high of $39.79 on 14 January 2020 to $14.90 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 14 January 2021

But the risk is not limited to major market crashes. Stocks fall even when markets are good—think events like earnings, business updates, and outlook changes. Read ICHR Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index—less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.