The Motley Fool Take
Display and lighting technology developer Universal Display delivered a first-quarter earnings surprise, with revenue rising 19% year-over-year and earnings popping by 35%. Investors may want to pick up a few shares of the organic light-emitting diode expert for three reasons:
1. Sales are lumpy, not slowing down. Ewing, N.J.-based Universal Display has a long history of unpredictable results on a quarter-by-quarter basis. For example, it’s currently expanding in China, where quarterly royalties and materials orders can vary wildly from one period to the next.
2. It’s the early days of a massive addressable market. OLED displays started out as an exclusive feature for high-end tablet computers and smartphones but are now moving down to the larger midrange market. Chief financial officer Sid Rosenblatt estimates that about one-third of global smartphone shipments come with Universal Display’s OLED screens nowadays, and he expects to be able to serve the entire smartphone market eventually.
3. Universal Display is expanding its horizons. OLED panels are starting to show up in power-efficient lighting products — in the interior cabin of the new Mercedes EQS electric car, in the taillights of several other car brands and in Nintendo’s upcoming video game consoles.
This company is going places, and over the long run, its stock price should follow suit. (The Motley Fool owns shares of and has recommended Universal Display.)
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