Entegris (ENTG) Buys ATMI (ATMI) For $1.15 Billion

NEW YORK (TheStreet) -- Entegris (ENTG) surged 10.2% to $11.33 after it announced Tuesday that it will buy ATMI (ATMI) for $1.15 billion. ATMI shares surged 25.5% to $33.80 following the news.

In the deal, Entegris will pay $34 a share in cash for ATMI. The companies expect the deal will close sometime in the second-quarter of 2014. The acquisition should help Entegris become a bigger player in the semiconductor supplies market.

Separate from the acquisition announcement both companies reported their fourth-quarter results.

ATMI reported a 70% drop in profits to $3.84 million. The company did beat estimates in its earnings, however, reporting earnings of 44 cents a share compared to the Capital IQ Consensus Estimate of 30 cents a share.

Entegris announced that its profits more than doubled to $23 million in the quarter. The company posted earnings of 18 cents a share, compared to analyst estimates of 13 cents a share.

TheStreet Ratings team rates ENTEGRIS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ENTEGRIS INC (ENTG) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ENTG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • 46.99% is the gross profit margin for ENTEGRIS INC which we consider to be strong. Regardless of ENTG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 10.81% trails the industry average.
  • ENTEGRIS INC reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ENTEGRIS INC reported lower earnings of $0.50 versus $0.92 in the prior year. This year, the market expects an improvement in earnings ($0.55 versus $0.50).
  • You can view the full analysis from the report here: ENTG Ratings Report


TheStreet Ratings team rates ATMI INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ATMI INC (ATMI) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, reasonable valuation levels, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, ATMI's share price has jumped by 37.59%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ATMI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has significantly increased by 71.67% to $35.86 million when compared to the same quarter last year. In addition, ATMI INC has also vastly surpassed the industry average cash flow growth rate of -75.92%.
  • The gross profit margin for ATMI INC is rather high; currently it is at 53.45%. Regardless of ATMI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ATMI's net profit margin of 8.42% is significantly lower than the industry average.
  • ATMI, with its decline in revenue, underperformed when compared the industry average of 4.4%. Since the same quarter one year prior, revenues slightly dropped by 7.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: ATMI Ratings Report

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