Why Is Ichor Holdings (ICHR) Down 27.4% Since Last Earnings Report?

A month has gone by since the last earnings report for Ichor Holdings (ICHR). Shares have lost about 27.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ichor Holdings due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Ichor Holdings, Ltd. before we dive into how investors and analysts have reacted as of late.

ICHR Q2 Earnings Beat Estimates on Margin Gains, Revenues Rise Y/Y

Ichor Holdings reported second-quarter 2026 non-GAAP earnings of 34 cents per share, beating the Zacks Consensus Estimate by 9.7%. The company had posted a loss of a penny in the year-ago quarter. Improved product mix and progress on its machining strategy supported the earnings upside.

Revenues increased 22.7% year over year to $294.8 million but missed the consensus mark by 1.85%. Inventory turns remained at 3.7 times as Ichor invested in working capital to support accelerating customer demand.

ICHR's Revenue Growth Accelerates

Second-quarter revenues increased 15% sequentially as demand strengthened across the semiconductor equipment market. Management said isolated part shortages prevented the company from recognizing its full revenue forecast before the June 2026 quarter end. The affected shipments were completed days later, and revenues exceeded $300 million for the 13 weeks ending July 3.

The company now expects 2026 revenues to increase at least 30% from 2025, aligning with the high end of its wafer fabrication equipment market expectations. Demand is being supported by investments in artificial intelligence infrastructure, advanced etch and deposition applications, gate-all-around architectures, advanced memory and leading-edge process technologies.

Ichor Delivers Strong Margin Expansion

Non-GAAP gross margin expanded 230 basis points year over year and 130 basis points sequentially to 14.1%. The result exceeded the upper end of management’s guidance, reflecting improved product mix, higher component revenues and gains from the company’s manufacturing realignment.

Non-GAAP operating expenses totaled $25.3 million. Operating income rose to $16.3 million from $4.6 million a year earlier, while the operating margin improved to 5.5% from 1.9%.

ICHR Advances Its Manufacturing Strategy

Ichor secured additional customer qualifications during the second quarter, including approvals for machining and welding operations at its high-volume manufacturing site in Malaysia. These qualifications expand the company’s ability to produce components internally and reduce dependence on outside suppliers.

Management said manufacturing capacity is not currently constraining growth. ICHR has installed capacity to support approximately $2 billion in annual revenues and believes targeted clean-room and machining investments could raise capacity within its existing footprint to about $3 billion annually.

ICHR’s Balance Sheet and Cash Flow

Ichor ended the second quarter with cash and equivalents of $256.5 million, up from $89.1 million at the end of the first quarter. The increase primarily reflected $195.4 million in net proceeds from an at-the-market equity offering involving 2.5 million shares at an average price of $80.70.

Cash used in operating activities totaled $15.9 million in the second quarter of 2026.

Total debt was pinned at $120.6 million, while the net debt coverage ratio was 1.1.

Ichor Issues Strong Q3 Guidance

For the third quarter of 2026, Ichor expects revenues between $315 million and $345 million. The midpoint of $330 million implies sequential growth of about 12% and year-over-year growth of approximately 38%.

Non-GAAP gross margin is projected between 14.5% and 15.5%, reflecting management’s target of roughly 100 basis points of sequential expansion. Non-GAAP earnings are expected in the range of 40-50 cents per share.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

The consensus estimate has shifted 17.61% due to these changes.

VGM Scores

At this time, Ichor Holdings has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a score of D on the value side, putting it in the bottom 40% for value investors.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Ichor Holdings has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Ichor Holdings belongs to the Zacks Electronics - Semiconductors industry. Another stock from the same industry, Qualcomm (QCOM), has gained 2.4% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

Qualcomm reported revenues of $9.95 billion in the last reported quarter, representing a year-over-year change of -4%. EPS of $2.21 for the same period compares with $2.77 a year ago.

Qualcomm is expected to post earnings of $2.18 per share for the current quarter, representing a year-over-year change of -27.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -2.4%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Qualcomm. Also, the stock has a VGM Score of F.

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This article originally published on Zacks Investment Research (zacks.com).

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