Why Is MKS (MKSI) Up 5.2% Since Last Earnings Report?

Core Insights - MKS Inc. reported strong Q3 2025 earnings, with adjusted earnings of $1.93 per share, exceeding estimates by 7.22% and showing a year-over-year increase of 12.2% [2] - Revenues reached $988 million, surpassing consensus estimates by 2.7% and reflecting a 10.3% year-over-year growth [2] Revenue Breakdown - Product revenues, accounting for 87% of total revenues, amounted to $860 million, up 10.8% year over year [3] - Service revenues, making up 13% of total revenues, increased by 6.7% year over year to $128 million [3] - Semiconductor market revenues (42% of total revenues) rose 9.8% year over year to $415 million [4] - Electronics & Packaging revenues (29.3% of total revenues) grew significantly by 25.1% year over year to $289 million [4] - Specialty Industrial revenues (28.7% of total revenues) saw a slight decline of 1% year over year to $284 million [4] - Vacuum Solutions revenues (39.1% of total revenues) increased by 11.9% year over year to $386 million [5] - Photonics Solutions revenues (25.2% of total revenues) decreased by 0.8% year over year to $249 million [5] - Materials Solutions revenues (35.7% of total revenues) climbed 17.7% year over year to $353 million [5] Operating Performance - Adjusted gross margin contracted by 160 basis points year over year to 46.7% [6] - Adjusted EBITDA increased by 3.4% year over year to $240 million, with an adjusted EBITDA margin of 24.3%, down 160 basis points [6] - Total operating expenses rose by 8% year over year to $256 million [6] - Non-GAAP operating income was $205 million, reflecting a 5.1% year-over-year increase, with an adjusted operating margin of 20.7%, down 100 basis points [7] Balance Sheet Highlights - As of September 30, 2025, cash and cash equivalents stood at $697 million, up from $674 million as of June 30 [8] - Long-term debt totaled $4.25 billion [8] - Cash flow from operations was $197 million in Q3 2025, compared to $165 million in the previous quarter [8] - Free cash flow increased to $147 million from $136 million in Q2 2025 [8] Q4 Guidance - MKS expects Q4 2025 revenues to be around $990 million, with a margin of +/- $40 million [9] - The company anticipates a gross margin of 46% (+/- 1%) and adjusted EBITDA of $235 million (+/- $24 million) [9][10] Market Sentiment - There has been a positive trend in estimates, with a 30.85% shift in consensus estimates over the past month [11] - MKS holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [13] Industry Comparison - MKS operates within the Zacks Electronics - Miscellaneous Products industry, where competitor Timken (TKR) reported revenues of $1.16 billion, reflecting a year-over-year change of +2.7% [14] - Timken's expected earnings for the current quarter indicate a change of -6% from the previous year, with a Zacks Rank 3 (Hold) as well [15]