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ASML stock analysis. Ticker: $ASML

ASML makes lithography machines that are used to produce microchips. The company just reported earnings and the stock jumped 10% giving the company a market value of 338 billion dollars. With 8.7 billion of cash and investments and just under 4 billion of debt, the enterprise value is 333 billion.

ASML’s machines are highly complex and sell for hundreds of millions of dollars. But they are also an integral part of the semiconductor industry and the company has a near monopoly in the space. Revenues over the last year increased by 30% to 30 billion US dollars, with net income increasing 44% to 8.7 billion. Gross margins also moved above 51%.

Despite the jump in share price, ASML’s guidance for 2024 looks rather weak. The company thinks next quarter revenue could drop 20% and full year revenue is likely to be flat. A major reason is that export controls with China could affect 10-15% of sales. So if revenue isn’t going to grow this year why is the stock so expensive at 11 times revenue, and 40 times earnings?

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