PHOTRONICS, INC. (PLAB): what the price assumes
boothcheck covers PHOTRONICS, INC. (PLAB) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-06-27.
Generated: 2026-08-30 · Source: https://boothcheck.com/report/PLAB
Headline
| Field | Value |
|---|---|
| Ticker | PLAB |
| Company | PHOTRONICS, INC. |
| Current price | $27.84/sh |
| Composition | Integrated Circuit (IC) 72% / Flat Panel Display (FPD) 28% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 6.6% |
| Operating margin today | 22.9% |
| Margin compression (value-band) | -16.3pp |
| Multiple paid | 6x operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in 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 (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | -0.50σ |
| cohort percentile (of 188 peers) | 1 |
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 | 0.82x | 5 | justifies |
| Earnings | 0.94x | 5 | justifies |
| Relative | 0.38x | 5 | justifies |
| Growth | 0.94x | 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 | $29.72 | 0.94x | yes | FCF base $0.1B, growth 1% (input: historical growth), terminal g 0.6%, WACC 9.2%, 5yr projection |
| DCF Exit Multiple | Growth | $30.89 | 0.90x | yes | Exit EV/EBITDA: 4.0x / 5.2x / 7.2x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $49.31 | 0.56x | yes | P/E 17.33x (blended: static sector reference 22x + trailing (TTM) 10x), scenarios: 14.7x / 17.3x / 20.0x (bear / base = reference held flat / bull), EV/EBITDA 11.69x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $29.16 | 0.95x | yes | BV/sh $21.05, ROE (TTM) 12.8%, ke 9.3% |
| Two-Stage Excess Return | Asset | $34.06 | 0.82x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $19.78 | 1.41x | yes | Rev $0.9B, growth 1% (input: historical growth; tapered), Terminal P/S: 1.6x / 1.9x / 2.2x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $95.55 | 0.29x | yes | EPS $2.73, growth 35% (input: historical EPS growth), PEG=0.29 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $42.98 | 0.65x | 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 | $35.08 | 0.79x | yes | BV $21.05 + 5yr PV of (ROE (TTM) 12.8% − Kₑ 9.3%) × BV; BV grows 8.3%/yr |
| Graham Number | Asset | $35.96 | 0.77x | yes | √(22.5 × EPS $2.73 × BVPS $21.05) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $67.52 | 0.41x | yes | EBITDA $0.22B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $26.27 | 1.06x | yes | FCF $96.3M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $23.84 | 1.17x | yes | SBC-adj FCF $0.08B (FCF $0.10B − SBC $0.01B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $88.09 | 0.32x | yes | EPS $2.73 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $10.52 | 2.65x | yes | BV $21.05 × (ROIC 4.6% / WACC 9.2%) |
| P/Sales Sector | Relative | $73.03 | 0.38x | yes | Revenue $0.86B × sector P/S 5.0x |
| PEG Fair Value | Relative | $102.38 | 0.27x | yes | EPS $2.73 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $29.51 | 0.94x | 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 | — |
Economic-Unit Decomposition (Sum Of The Parts)
Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Photronics (consolidated) | operating | enterprise | 0.8B reported-currency | — | withheld | unresolved no unit value |
No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.
Solvency
| Field | Value |
|---|---|
| Net cash | $633.8m |
| Net debt / NOPAT (after-tax) | -4.00x (net cash) |
| Net debt / operating income (pre-tax) | -3.21x (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.)
- FY2025 10-K: …The acquisition expands the Company's testing capabilities in these areas and supports customers as SiPh and co‑packaged optics technologies transition from development into high‑volume manufacturing, including applications related to artificial intelligence infrastructure. The acquisition was accounted for under the…
- FY2025 10-K: …for $ 100 million in cash, subject to customary purchase price adjustments. The Company acquired FRT GmbH in fiscal 2019 for total consideration of $ 24.4 million, net of cash acquired. Headquartered in Bergisch Gladbach, Germany, the FRT business was part of the Company's Systems segment. On November 1, 2023, we…
- UCTT (Ultra Clean Holdings, Inc.)
- FY2025 10-K: …0001275014 2025 FY false P30D iso4217:USD xbrli:shares iso4217:USD xbrli:shares uctt:segment xbrli:pure uctt:factoring_arrangement uctt:unit iso4217:EUR 0001275014 2024-12-28 2025-12-26 0001275014 2025-06-27 0001275014 2026-02-17 0001275014 2025-12-26 0001275014 2024-12-27 0001275014 us-gaap:ProductMember 2024-12-28…
- FY2025 10-K: …of Flextronics International Ltd. from January 2012 to June 2015. Mr. Cook joined Infineon Technologies AG in 2003 and served as its Vice President and 10 Table of Contents General Manager, RF and Protection Devices from May 2008 to December 2011, its Managing Director, Infineon Technologies North America from July…
- ICHR (Ichor Holdings, Ltd.)
- FY2025 10-K: …are: 3 Table of Contents Grow Our Market Share within Existing Semiconductor Customer Base We intend to grow our position within our existing semiconductor customers by continuing to leverage our specialized engineering talent, early collaboration approach with OEMs to foster long-term relationships, and expanded…
- FY2025 10-K: …0001652535 00-0000000 2025 FY FALSE P7Y P1Y 1 xbrli:shares iso4217:USD iso4217:USD xbrli:shares xbrli:pure ichr:segment ichr:lease 0001652535 2024-12-28 2025-12-26 0001652535 2026-02-13 0001652535 2025-06-27 0001652535 2025-09-27 2025-12-26 0001652535 2025-12-26 0001652535 2024-12-27 0001652535 2023-12-30 2024-12-27…
- AMKR (AMKOR TECHNOLOGY, INC.)
- FY2025 10-K: …processing and related test services as "Advanced Products" and to our wirebond packaging, power device packaging and related test services as "Mainstream Products." The following table sets forth, for the periods indicated, net sales for Advanced Products and Mainstream Products and the percentage of total net sales…
- FY2025 10-K: …Our Consolidated Financial Statements include the accounts of Amkor Technology, Inc. and its subsidiaries. Our Consolidated Financial Statements reflect the elimination of all significant inter-company accounts and transactions. Our investments in variable interest entities in which we are the primary beneficiary are…
- ONTO (ONTO INNOVATION INC.)
- FY2025 10-K: …Ushio, Canon, GigaVis Co. Ltd. and PDF Solutions. Each of our products also competes with products that use different metrology, inspection or lithography techniques. Some of our competitors have greater financial, engineering, manufacturing and marketing resources, broader product offerings and service capabilities…
- FY2025 10-K: …not necessarily indicative of what the actual results of operations of the combined company would have been if the Acquisition had occurred at the beginning of 2024, nor are they indicative of future results of operations: Year Ended January 3, 2026 December 28, 2024 Unadjusted (in thousands & unaudited) Revenue $…
- CAMT (CAMTEK LTD)
- FY2025 20-F: …by ( 20.99 %) Priortech Ltd. ("Priortech"), an Israeli corporation listed on the Tel-Aviv Stock Exchange and ( 17.06 %) Chroma Ate Inc. ("Chroma"). Camtek provides automated and technologically advanced solutions dedicated to enhancing production processes, increasing products yield and reliability, enabling and…
- FY2025 20-F: …liabilities and shareholders' equity 1,259,833 892,042 Chief Executive Officer Chief Financial Officer Date of approval of the financial statements: March 19, 2026 The accompanying notes are an integral part of the consolidated financial statements. F - 6 Camtek Ltd. and its subsidiaries Consolidated Statements of…
- KLAC (KLA CORPORATION)
- FY2025 10-K: …and operating results could be adversely impacted. 23 Table of Contents We are exposed to risks associated with a highly concentrated customer base. Our customer base, particularly in the semiconductor industry, historically has been highly concentrated due to corporate consolidation, acquisitions and business…
- FY2025 10-K: …and testing wafers and reticles, integrated circuits ("IC"), advanced packaging, light-emitting diodes, power devices, compound semiconductor devices, microelectromechanical systems ("MEMS"), data storage and PCBs as well as general materials research. We also provide comprehensive support and services across our…
- VSH (VISHAY INTERTECHNOLOGY INC)
- FY2025 10-K: …from sale to end customer. The warranty deferred revenue liability is recorded within Other Accrued Expenses and Other Liabilities on the accompanying consolidated balance sheets. The deferred revenue balance associated with the service-type warranty performance obligations and the components that comprise the change…
- FY2025 10-K: Consolidated Balance Sheets F-4 Consolidated Statements of Operations F-6 Consolidated Statements of Comprehensive Income F-7 Consolidated Statements of Cash Flows F-8 Consolidated Statements of Stockholders' Equity F-9 Notes to the Consolidated Financial Statements F-10 F-1 Report of Independent Registered Public…
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.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- 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.