Is Photronics (PLAB) Pricing Reflect Future Growth After Strong 1 Year Share Price Surge

• If you are looking at Photronics and asking whether the current share price is giving you fair value or a margin of safety, you are in the right place.
• The stock closed at US$37.03, with a 7 day return of a 4.6% decline, a 30 day return of 6.7%, a year to date return of 10.8% and a 1 year return of 71.7%. These figures naturally raise questions about how much of the story is already reflected in the price.
• Recent news coverage has focused on Photronics as a specialist in photomask technology for the semiconductor industry and on how investors are treating this niche exposure within the broader chip supply chain. This context is important because it helps explain why the stock has attracted attention alongside other semiconductor names, even without a single headline event driving all of the recent moves.
• Right now, Photronics has a valuation score of 3 out of 6, which means it screens as undervalued on half of the checks we run. Next we will look at how different valuation methods line up on this, before finishing with a way to assess value that can give you a fuller picture than any one model on its own.

Photronics delivered 71.7% returns over the last year. See how this stacks up to the rest of the Semiconductor industry.

Approach 1: Photronics Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business might be worth today by projecting its future cash flows and then discounting those back to the present.

For Photronics, the model used is a 2 Stage Free Cash Flow to Equity approach. The company’s latest twelve month Free Cash Flow is reported at about $101.1 million. Simply Wall St then projects annual Free Cash Flow out to 2035, with figures ranging from about $95.6 million in 2026 to about $106.4 million in 2035. Analysts typically provide estimates for up to 5 years, so the later years are extrapolated from earlier trends.

After discounting these projected cash flows and adding a terminal value, the model arrives at an estimated intrinsic value of about $19.71 per share. Compared with the recent share price of US$37.03, the DCF output suggests the stock is 87.9% overvalued on this metric alone.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Photronics may be overvalued by 87.9%. Discover 56 high quality undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Photronics.

Approach 2: Photronics Price vs Earnings

For profitable companies, the P/E ratio is a straightforward way to see how much you are paying for each dollar of earnings. This is why it is often the first check investors use when they are comparing similar stocks.

What counts as a “normal” P/E depends a lot on what the market expects for future growth and how risky those earnings are perceived to be. Higher expected growth or lower perceived risk can justify a higher multiple, while slower growth or higher risk usually points to a lower one.

Photronics currently trades on a P/E of about 16.0x. That is well below the Semiconductor industry average of roughly 42.8x and also below the peer group average of around 57.1x, which might initially suggest a discount relative to other semiconductor names.

Simply Wall St’s Fair Ratio metric estimates what a more tailored P/E could look like, based on factors such as earnings growth profile, industry, profit margins, market cap and company specific risks. Because it blends these elements, it can be more informative than a simple comparison with peers or the broad industry, which may differ meaningfully on risk and growth.

For Photronics, the Fair Ratio is 25.1x, which is higher than the current 16.0x. On this metric, the shares screen as undervalued.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Photronics Narrative

Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St’s Community page you can use Narratives, where you write your own story for Photronics by setting assumptions for future revenue, earnings and margins. You can then link that story to a forecast and fair value, and compare your fair value with today’s price to decide if Photronics looks attractive or expensive. The platform updates your Narrative as new news or earnings arrive. For example, one investor might build a Narrative that lines up with the current fair value estimate of US$42.00 per share and relatively higher future P/E assumptions. Another might take a more cautious view with lower revenue growth or profit margin expectations. Seeing those different fair values side by side helps you decide which story you find more reasonable.

Do you think there's more to the story for Photronics? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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