Rudolph Beats Estimates - Analyst Blog

Rudolph Technologies, Inc (RTEC) reported non-GAAP diluted earnings per share of 36 cents for the fourth quarter 2010, beating the Zacks Consensus Estimate of 31 cents. The result compares favorably with last year's 2 cents.

The GAAP earnings provided by the company was 30 cents per share, which increased significantly from a loss of 20 cents in the prior year quarter.

Quarter in Detail

Revenue for the quarter increased 86.9% from the prior year to $54.0 million, which failed to beat the Zacks Consensus Estimate of $55.0 million. International represented about 63.0% of sales, down from 71.0% last year, while domestic represented 37.0% of sales, up from 29.0%. Revenue from front-end semiconductor customers were 79.0% of revenue and back-end customers were 21.0%.

Gross profit increased 149.6% to $29.2 million from last year. Gross margin increased from 40.5% to 54.1% in light of higher revenues, which included an increase in software sales, higher average selling prices and lower reserves owing to better inventory utilization.

Non-GAAP operating income increased from $1.0 million last year to $13.0 million. Operating margin increased from 3.5% in the previous year quarter to 24.1%.

Conclusion

Analyst estimates remained stable in the run up to the earnings release. The average estimate was 31 cents when the company reported. We note that Rudolph Technologies has consistently exceeded estimates over the past year or so. The average surprise in the preceding 4 quarters is a positive 55.52%, and another positive surprise was therefore expected.

Rudolph Technologies faces stiff competition from Camtek Ltd. (CAMT) and KLA-Tencor Corporation (KLAC).

We currently have Zacks # 3 Rank for Rudolph Technologies, which translates into a Hold rating on short term basis. We have an "Outperform" recommendation on long term basis.