PHOTRONICS, INC. (PLAB): what the price requires
The current priced-in claim for PHOTRONICS, INC. (PLAB) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/PLAB
Headline
| Field | Value |
|---|---|
| Ticker | PLAB |
| Company | PHOTRONICS, INC. |
| Current price | $28.65/sh |
| Composition | Integrated Circuit (IC) 72% / Flat Panel Display (FPD) 28% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 7.0% |
| Operating margin today | 23.5% |
| Margin compression implied | -16.5pp |
| Multiple paid | 6x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 12.9% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.50σ |
| cohort percentile (of 177 peers) | 3 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.84x | 5 | justifies |
| Earnings | 0.97x | 5 | justifies |
| Relative | 0.39x | 5 | justifies |
| Growth | 0.96x | 3 | justifies |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $29.83 | 0.96x | yes | FCF base $0.1B, growth 1% (input: historical growth), terminal g 0.6%, WACC 9.2%, 5yr projection |
| DCF Exit Multiple | Growth | $31.54 | 0.91x | yes | Exit EV/EBITDA: 4.0x / 5.4x / 7.4x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $49.78 | 0.58x | yes | P/E 17.43x (blended: static sector reference 22x + trailing (TTM) 11x), scenarios: 14.8x / 17.4x / 20.1x (bear / base = reference held flat / bull), EV/EBITDA 11.77x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $29.27 | 0.98x | yes | BV/sh $21.13, ROE (TTM) 12.8%, ke 9.3% |
| Two-Stage Excess Return | Asset | $34.18 | 0.84x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $20.36 | 1.41x | yes | Rev $0.9B, growth 1% (input: historical growth; tapered), Terminal P/S: 1.7x / 2.0x / 2.3x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $95.55 | 0.30x | yes | EPS $2.73, growth 35% (input: historical EPS growth), PEG=0.30 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $43.14 | 0.66x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.21B × (1−20%) / WACC 9.2% → EPV (no growth) |
| Residual Income | Asset | $35.21 | 0.81x | yes | BV $21.13 + 5yr PV of (ROE (TTM) 12.8% − Kₑ 9.3%) × BV; BV grows 8.3%/yr |
| Graham Number | Asset | $36.03 | 0.80x | yes | √(22.5 × EPS $2.73 × BVPS $21.13) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $67.77 | 0.42x | yes | EBITDA $0.22B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $26.37 | 1.09x | yes | FCF $96.3M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $23.93 | 1.20x | yes | SBC-adj FCF $0.08B (FCF $0.10B − SBC $0.01B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $88.09 | 0.33x | yes | EPS $2.73 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $10.56 | 2.71x | yes | BV $21.13 × (ROIC 4.6% / WACC 9.2%) |
| P/Sales Sector | Relative | $73.30 | 0.39x | yes | Revenue $0.86B × sector P/S 5.0x |
| PEG Fair Value | Relative | $102.38 | 0.28x | yes | EPS $2.73 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $29.51 | 0.97x | yes | EPS $2.73 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $633.8m |
| Net debt / NOPAT (after-tax) | -3.93x (net cash) |
| Net debt / operating income (pre-tax) | -3.15x (net cash) |
| Share count CAGR (buyback) | -1.0% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- The market is pricing modest decline, not growth. At about $34 Photronics trades near 8 times company-wide operating income, which inverts to roughly 3.4% annual operating growth, well below what a 22.9% operating margin and a 12.8% return on equity would normally command. Three of four valuation families support or exceed the price.
- The balance sheet is the anchor: about $634M of net cash and effectively no debt, against a book value near $21 per share. The stock trades close to where the asset and residual-income frames land, so the downside is cushioned by real assets and cash.
- The mix is shifting. Q2 FY2026 was flat at $210M as a 5% decline in the IC photomask segment offset 13% growth in flat panel display, with the company investing heavily ($330M of fiscal-2026 capex) to push toward higher-value advanced-node and AMOLED masks.
Bull Case
Read Photronics through the gap between what the market is pricing and what the business earns, because that gap is the case. At about $34 (June 27, 2026) the price is roughly 8 times company-wide operating income, which inverts to only about 3.4% annual operating growth over five years. That is a low bar for a company running a 22.9% operating margin, a 12.8% return on equity, and converting earnings to cash; the engine flags the priced-in assumption as within range, meaning the market is paying for near-stagnation while the fundamentals show a healthy, profitable franchise. When the implied growth sits below what the current margins and returns would normally justify, the asymmetry favors the business outperforming the price.
Photronics occupies a real position in a structurally necessary niche. It makes photomasks, the master templates used to pattern chips and displays, and its 10-K notes that demand for photomasks is driven by new product design activity and by the industry's migration to more advanced design nodes. Every new chip and display design needs new masks, so Photronics is levered to design-release activity and to the long-run move to finer geometries rather than to unit volumes alone. The mix is already tilting toward the higher-value end: Q2 FY2026 flat-panel-display revenue grew 13% year over year, helped by a new G8.6 AMOLED mask writer in Korea targeting higher average selling prices, even as the integrated-circuit segment dipped on design-release delays. That is the company investing into the premium part of its own market.
The balance sheet makes the whole thesis lower-risk than the typical semiconductor cyclical. Photronics holds about $634 million of net cash against roughly $4 million of gross debt, a book value near $21 per share, and the asset-based frames, two-stage excess return and residual income, land right around the current price. That means a buyer at today's quote is paying close to the value of the assets and the modest excess returns, with the design-node migration and the AMOLED ramp as upside the price barely credits. The company is funding $330 million of fiscal-2026 capex from its own cash to expand advanced-node and display capacity in the U.S. and Korea, so the growth is self-funded. A profitable, cash-rich photomask leader trading at single-digit operating multiples is the definition of a value-and-asset-supported name.
Bear Case
The governance and capital-allocation question is the right place to press, because Photronics holds an enormous cash pile and the path it takes with that cash determines the return. The company sits on about $634 million of net cash, more than a third of its enterprise value, yet pays no dividend and the disclosures point to capital flowing into capacity rather than to shareholders: management reaffirmed $330 million of fiscal-2026 capex. Heavy reinvestment can be the right call in a node-migration cycle, but it is also how a cash-rich balance sheet quietly underperforms, with returns on the new capacity uncertain and the cash neither compounding at a high rate nor being returned. The reported ROIC near 4.6% is well below the cost of capital, which is the warning sign that the capital being deployed is not yet earning its keep.
The structure adds a wrinkle a shareholder should not ignore: Photronics runs significant operations through joint ventures, particularly in Asia, so a portion of the consolidated cash and earnings is attributable to noncontrolling interests rather than fully to the parent's shareholders. Cash that sits inside a partly-owned Chinese or Korean subsidiary is not as freely deployable for buybacks or dividends as headline net cash implies, and geopolitical tension can complicate moving it. The 10-K is candid that the photomask industry is highly competitive, that most customers use multiple suppliers, and that competition turns on quality, delivery, and price against a long list of rivals including Toppan, Hoya, LG Innotek, SK-Electronics, and several Chinese mask makers, plus customers' own captive photomask operations. Pricing power in that field is limited, which caps how much the reinvestment can lift returns.
The cyclical and demand risks compound the allocation concern. The 10-K notes that an increase in semiconductor or display sales does not always translate into photomask demand, because masks track design activity rather than production volumes, so a slowdown in new designs hits Photronics even when chip fabs are busy. Q2 FY2026 showed exactly that: IC revenue fell 5% year over year and 11% sequentially on design-release delays, with management citing high fab utilization, memory supply constraints, and geopolitical tension as headwinds, especially in Asia. A business whose largest segment is contracting, whose returns on capital sit below cost, and which is plowing a large cash hoard into capacity rather than returning it, is one where the cheap multiple can persist as a value trap unless the design cycle and capital discipline both turn favorable.
Valuation
Photronics is a value-and-asset-supported name, and the inversion confirms it. At about $34 the market pays roughly 8 times company-wide operating income, which inverts to only about 3.4% annual operating growth over a five-year stage, solved at a 13.1% cost of capital. The engine notes that pace is within what the company has recently delivered, so the price is asking for very little: essentially flat-to-modest operating profit. For a business earning a 22.9% trailing operating margin and a 12.8% return on equity, a price that embeds near-stagnation is undemanding, which is why the composite reads within range rather than stretched.
The method cross-section is broadly supportive, with three of four families at or above the price. The asset family is the anchor: two-stage excess return lands right at the quote and residual income just below it, both built on a roughly $21 book value, so the price sits essentially at intrinsic asset value plus modest excess returns. The earnings family clusters near the price as well, with earnings-power value modestly above and the earnings-yield method just above. The relative family is where the optimism lives, sector P/E, EV/EBITDA, and the PEG and Lynch methods all produce values far above the quote, but those lean on a high historical EPS-growth input that a mature, cyclical photomask maker is unlikely to repeat, so they should be discounted as upper-bound rather than central. Only the growth-DCF lands near the price on the company's own low recent growth, which is the realistic frame.
The honest synthesis is that the downside is well protected and the upside depends on the mix shift and capital discipline. The reconciliation is that Photronics is cheap on assets and earnings but is not credited for growth, appropriately, given a contracting IC segment and sub-cost-of-capital ROIC. The valuation rewards a buyer if the advanced-node and AMOLED investments lift returns and the design cycle recovers, and it offers a real asset floor if they do not, which is the favorable shape of a cash-rich value name trading near its asset value rather than a momentum bet.
Catalysts
The catalysts run through the quarterly cadence and the capacity build. Photronics reported Q2 FY2026 on May 28, 2026, with flat total revenue of $210 million as a 13% year-over-year gain in flat-panel-display masks ($62.4 million) offset a 5% decline in integrated-circuit masks ($147.5 million, down 11% sequentially) on design-release delays. Management guided Q3 revenue to $207 million to $215 million amid ongoing market uncertainty and reaffirmed $330 million of fiscal-2026 capex. The near-term swing factor is the IC segment recovering as delayed design releases convert, so the next two prints are the test of whether the largest business stabilizes.
The strategic catalysts are the high-value capacity expansions. The recently installed G8.6 AMOLED mask writer in Korea targets higher average selling prices and is expected to enter full production later this year, and continued investments in the U.S. and Korea are meant to shift the revenue mix toward advanced-node and premium display photomasks. Evidence that those expansions lift margins and returns on capital would be the most meaningful re-rating trigger, since the current sub-cost-of-capital ROIC is the main thing holding the multiple down. On capital allocation, any move to return some of the large cash balance to shareholders would directly address the bear case. Sentiment is constructive, with a Strong-to-Moderate Buy consensus among a small analyst group and price targets clustered around $47 to $51.50, well above the current quote. The clearest upside triggers are an IC design-release recovery and visible returns on the new advanced capacity; the clearest risk triggers are prolonged IC weakness, geopolitical disruption to Asian operations, and capital continuing to flow into capacity rather than returns.
Peer Cohorts (Per Segment, With Filing Citations)
Photronics (consolidated) (reported)
- FORM (FormFactor, Inc.)
- (no filing in the citation store)
- UCTT (Ultra Clean Holdings, Inc.)
- (no filing in the citation store)
- ICHR (Ichor Holdings, Ltd.)
- (no filing in the citation store)
- AMKR (AMKOR TECHNOLOGY, INC.)
- (no filing in the citation store)
- ONTO (ONTO INNOVATION INC.)
- (no filing in the citation store)
- CAMT (CAMTEK LTD)
- (no filing in the citation store)
- KLAC (KLA CORPORATION)
- (no filing in the citation store)
- VSH (VISHAY INTERTECHNOLOGY INC)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.