Semiconductor materials supplier Entegris (NASDAQ: ENTG) reported revenue ahead of Wall Street’s expectations in Q4 CY2025, but sales fell by 3.1% year on year to $823.9 million. Guidance for next quarter’s revenue was optimistic at $805 million at the midpoint, 2.3% above analysts’ estimates. Its non-GAAP profit of $0.70 per share was 5.4% above analysts’ consensus estimates.

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Dave Reeder, Entegris’ President and Chief Executive Officer, said: “Our solid performance in the fourth quarter was highlighted by revenue, adjusted EBITDA margin, and non-GAAP EPS all near or above the high-end of our guidance range. For 2025, our unit-driven growth was a result of ongoing strength in liquid filtration, selective etch and CMP consumables, as volume continued to increase in the most advanced technologies. Free cash flow improved in 2025, and we expect continued improvement in cash generation in 2026, further strengthening our balance sheet and enabling incremental de-leveraging.”

Company Overview

With fabs representing the company’s largest customer type, Entegris (NASDAQ: ENTG) supplies products that purify, protect, and generally ensure the integrity of raw materials needed for advanced semiconductor manufacturing.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Entegris grew its sales at a solid 11.4% compounded annual growth rate. Its growth beat the average semiconductor company and shows its offerings resonate with customers. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore's Law) could make yesterday's hit product obsolete today. Entegris’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 4.8% over the last two years.

This quarter, Entegris’s revenue fell by 3.1% year on year to $823.9 million but beat Wall Street’s estimates by 1.4%. Despite the beat, the drop in sales could mean that the current downcycle is deepening. Company management is currently guiding for a 4.1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 6% over the next 12 months. Although this projection suggests its newer products and services will spur better top-line performance, it is still below average for the sector.

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Product Demand & Outstanding Inventory

Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.

This quarter, Entegris’s DIO came in at 126, which is 5 days below its five-year average. At the moment, these numbers show no indication of an excessive inventory buildup.

Key Takeaways from Entegris’s Q4 Results

It was good to see Entegris beat analysts’ EPS expectations this quarter. We were also glad its adjusted operating income outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 2.5% to $125.47 immediately after reporting.

Entegris had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).