Entegris (ENTG)
TL;DR
Entegris is a pure-play semi materials & consumables supplier — CMP slurries/pads, liquid & gas filtration, FOUPs, deposition / selective etch chemistries. Revenue is 75% unit-driven (MSI / wafer starts) and 25% CapEx-driven (fab construction); 100% semi-cycle exposed, no non-semi pockets. Just reported revenue $812M (+5% YoY), GM 46.9%, adj EBITDA 27.8%, FCF $144M. Stock $149 (72x P/E(ttm)) prices in 2027 fab-construction recovery with LT revenue growth ceiling ~10-12%, structurally below tools+chemistry peers like MKSI; downside: mainstream-logic softness and slow GM convergence to 47-48%.
Summary
| Finding | Assessment |
|---|---|
| 9-Quarter Stock Return | $139→$149 (+7%). Trough $82 (Q2 2025) → +82% rebound. TTM OP fell $534M→$488M then recovered to $507M. P/E expanded 41x→72x on cycle-recovery thesis. |
| Business Model | Pure-play semi materials & consumables — CMP, filtration, FOUPs, etch chemistries. $3.2B TTM, 75% unit-driven (MSI), 25% CapEx-driven (fab). 100% semi-cycle exposed, no non-semi pockets. |
| Competitive Moat | NARROW Designed-in POR positions, materials purity expertise compounds with node complexity. DuPont, Element, Solvay, Versum compete; China-domestic emerging in mainstream CMP. |
| Past 5-YR Drivers | CMC Materials acquisition (2022, $6.5B), WFE down-cycle 2023-2025, manufacturing CapEx cycle completed ($1B incremental capacity built). |
| Recent Stock Move | $82 trough (Q2 2025) → $149 (current). Q1 2026 +5% revenue inflection; raised industry outlook; GM expansion to 46.9%. |
| Revenue Trend | ACCELERATING Rev YoY: 5% (Q1 2026) → 7% (Q2 2026E). |
| Margin Trend | EXPANDING OM%: 17% (Q1 2026) → 18% (Q2 2026E). |
| TTM OP Trajectory | RECOVERING TTM OP QoQ: +4% (Q1 2026) → +8% (Q2 2026E). TTM OP $507M→$546M off the $488M trough. |
| Key Opportunities | 2027 WFE + fab construction up-cycle, GM expansion to 47-48% historical levels, advanced packaging $100M+ run-rate, Investor Day NYC Nov 2026. |
| Key Risks | 72x P/E on trough earnings, mainstream logic mixed, net leverage 3.6x, KSP/Rockrimmon dilution, Middle East noble-gas cost. |
| Catalysts | Q2 2026 print, KSP breakeven end-2026, leverage to 3x by end-2026, Investor Day Nov 2026, 2027 WFE ramp. |
| P/E(ttm) Valuation | 72x supported by cycle-recovery + GM expansion thesis. Upside 80x on capital return announcement; downside 40x on WFE cycle delay. |
Q1 FY2026 Key Data
- Revenue $812M (+5% YoY) above midpoint. GAAP/non-GAAP GM 46.9% (above high end; +240bps QoQ; ~50bps one-time). Adj EBITDA $226M (27.8%). Non-GAAP EPS $0.86. FCF $144M (18% margin).
- By segment: Advanced Purity Solutions (APS) $464M, +7% YoY, 29.1% adj OM (record liquid filtration, 3-yr high FOUPs); Materials Solutions $351M, +3% YoY, 22% adj OM (CMP, advanced deposition, selective etch).
- Q2 guide: $815-845M revenue (+5% midpoint), GM 46.25-47.25%, adj EBITDA 27.5%, non-GAAP EPS $0.76-0.84. Q3 flash: +5% sequential (~$870M). New CFO Sukhi Nagesh effective May 18.
Key Takeaways from Earnings Call
- Industry outlook RAISED vs February call. 2026 MSI raised from low-to-mid to mid-to-high single digit. Fab construction raised from low single to high single digit. WFE strong. Driven by DRAM AI tailwind, 2-nm logic ramp, NAND layer scaling 250 → 300+ layers.
- Gross margin in structural expansion mode. Q1 46.9% = +240bps QoQ. ~100bps from useful-life accounting change; ~140bps from productivity + footprint optimization. Chandler AZ subscale facility closed Q1; Chester PA closed Q4 2025. KSP and Rockrimmon (CO) plants still dilutive in 2026.
- Deleveraging accelerated, capital return on the table for 2027. Net leverage 3.6x (vs prior guide <3.5x); now targeting 3x by end-2026. $50M term loan paid in Q1 ($300M in 2025); $400M remaining. New CFO has M&A/corp-dev background — 2027 could open shareholder return or M&A.
- Advanced packaging now >$100M annual run-rate. CMP for HBM/TSV, advanced flow control for thick resists, carriers. Limited historical exposure but growing; more details at Investor Day in early November 2026 (NYC). 60%+ of revenue from advanced logic + memory; ~$1B incremental capacity already built.
Key Segments and Revenue Mix (Q1 FY2026)
| Segment | Q1 2026 Revenue | % of Total | Key Details |
|---|---|---|---|
| Advanced Purity Solutions (APS) | $464M | 57% | +7% YoY, 29.1% adj OM. Liquid filtration (3rd consecutive record quarter), FOUPs (3-yr revenue high), gas filtration. AI-driven advanced logic and DRAM POR wins. |
| Materials Solutions (MS) | $351M | 43% | +3% YoY, 22% adj OM. CMP consumables (slurries + pads), advanced deposition materials, selective etch chemistries. Strong CMP demand from HBM/CoWoS. |
Revenue mix: 75% unit-driven (correlated to MSI / wafer starts), 25% CapEx-driven (2/3 fab construction, 1/3 WFE). End markets Q1 2026: Advanced logic ~40% (2-nm ramp), Memory ~30% (DRAM + NAND layer scaling), Mainstream logic ~30% (mixed, 75-80% utilization). Regions Q1: Taiwan +18%, broader Asia +10%+, China modestly down. 85% of China revenue from in-region production, targeting 90% by end-2026. Competitors: DuPont (CMP), Solvay/Syensqo (specialty chemistry), Element Solutions, Versum (Merck), MKS-Atotech.
Business Model
SUPPLIERS
Specialty chemicals (Cu, Ce, slurries)
Polymers & resins
Filtration membranes & media
Noble gases (helium, neon) & precursors
Materials /
Membranes
→
ENTEGRIS
Pure-play semi consumables:
CMP slurries/pads, filtration, FOUPs
Deposition / selective etch chemistries
75% unit-driven (MSI) · 25% CapEx-driven (fab)
$812M Q1'26 ($3.2B TTM) · 100% semi cycle · LT ceiling ~10-12%
Materials /
Filtration /
Containers
→
CUSTOMERS
Foundries (TSMC, Samsung, GlobalFoundries)
Memory (Micron, SK Hynix, Samsung)
Logic (Intel, AMD, NVIDIA via foundries)
Mainstream & specialty (TI, ON, STM)
Moat Assessment: NARROW
- Designed-in POR positions create switching costs: CMP slurries, selective etch chemistries, and liquid filtration are spec’d into customer process flows. Once qualified, replacement requires re-qualification across multiple nodes. ENTG holds strong POR share at leading-edge logic 2-nm and HBM/DRAM.
- Materials purity expertise compounds with node complexity: Sub-5nm logic requires orders-of-magnitude tighter contamination control. NAND 300+ layers introduces new materials (moly, selective etch); DRAM HBM stacking adds CMP steps. Each transition lifts content per wafer.
- Competitive pressure persists in CMP and chemistry: DuPont, Element Solutions, Solvay/Syensqo, and Merck/Versum compete in specialty chemicals; emerging China-domestic CMP suppliers. Moat is narrow because 3-4 leading foundries concentrate buying and hold pricing leverage.
Stock vs. Earnings — 5-Year Performance
- Stock at $149, vs $139 (Q1 2024) and $82 trough (Q2 2025) — +82% from trough but only +7% from 9-quarter base. Bottomed in 2024-2025 on WFE down-cycle and CMC-Materials-deal debt overhang; recovered on AI tailwind, GM expansion, and Q1 2026 +5% revenue inflection.
- TTM OP fell from $534M (Q4 2024) to $488M (Q4 2025) before recovering to $507M in Q1 2026; Q2 2026E guided to $546M. The TTM OP trough was Q4 2025 — reflects the 7% CapEx-driven revenue decline through 2025 plus operating deleverage.
- P/E(ttm) ranged 37x-73x as the market priced in cycle recovery. The current 72x sits at the upper end of the historical band, on cyclically-trough EPS — if 2027 WFE ramp materializes, forward multiple compresses materially.
Past 5-Year Key Drivers
- CMC Materials acquisition (closed Jul 2022, $6.5B): Created the largest pure-play semi materials supplier; added CMP slurries/pads + electronic chemicals to ENTG’s filtration franchise. Deal debt drove leverage to 5x+ and a multi-year deleveraging arc; 2026 net leverage now 3.6x → 3x target.
- WFE down-cycle 2023-2025 was the central headwind: Revenue declined or stayed flat 2023-2025. FY2025 revenue flat YoY, with unit-driven +2% offset by CapEx-driven -7% (mostly FOUPs and fluid handling). Stock fell from $148 (Q1 2024) to $82 trough (Q2 2025) before recovering.
- Manufacturing CapEx cycle completed; capacity in place for next up-cycle: $1B+ incremental revenue capacity built; KSP (Taiwan) ramping, Rockrimmon (CO) qualifying products in 2026 for 2027 ramp. FY2026 CapEx returns to $250M (vs peak years). FCF margin 12.7% in 2025, in line with target.
Quarterly Key Metrics
| USD | Q1'24 | Q2'24 | Q3'24 | Q4'24 | Q1'25 | Q2'25 | Q3'25 | Q4'25 | Q1'26 | Q2'26E |
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter End | Mar24 | Jun24 | Sep24 | Dec24 | Mar25 | Jun25 | Sep25 | Dec25 | Mar26 | Jun26 |
| Stock | $139 | $134 | $114 | $99 | $88 | $82 | $93 | $87 | $109 | $149 |
| Stock QoQ | +17% | -4% | -15% | -13% | -11% | -7% | +14% | -7% | +25% | +37% |
| Rev YoY | -16% | -10% | -9% | 5% | 0% | -2% | 0% | -3% | 5% | 7% |
| OM% | 15% | 16% | 17% | 18% | 16% | 15% | 15% | 15% | 17% | 18% |
| R40 (RevYoY+OM%) | -1% | 6% | 8% | 22% | 16% | 12% | 15% | 12% | 22% | 25% |
| TTM OP ($M) | $445 | $462 | $465 | $534 | $539 | $526 | $512 | $488 | $507 | $546 |
| TTM OP QoQ | +4% | +4% | +1% | +15% | +1% | -2% | -3% | -5% | +4% | +8% |
| FCF/OP | 56% | 63% | 60% | 59% | 50% | 50% | 65% | 81% | 100% | 121% |
| Debt/EBITDA | 4.9x | 4.7x | 4.7x | 4.1x | 4.1x | 4.2x | 4.1x | 4.0x | 3.9x | 3.9x |
| P/E(ttm) | 37x | 73x | 54x | 51x | 43x | 41x | 47x | 49x | 56x | 72x |
Recent Stock Performance & Drivers
- Stock currently $149, vs $82 (Q2 2025 trough) and $109 (Q1 2026 close). Driven by Q1 2026 +5% revenue inflection after 6 quarters of flat-to-down YoY, raised industry outlook (MSI mid-to-high single, fab construction high single), and structural gross-margin expansion to 46.9%.
- TTM OP recovered to $507M from the $488M Q4 2025 trough; Q2 2026E guided to $546M. FCF/OP jumped to 100% in Q1 2026 (vs 50-65% range through 2025) as CapEx normalizes and working capital releases. The Q1 2026 FCF $144M (18% margin) is a multi-year high.
- P/E(ttm) expanded from 41x trough (Q2 2025) to 72x (Q2 2026E) as the market re-rated ENTG on the cycle-recovery thesis. The 72x prints on cyclically-trough EPS; if 2027 revenue grows mid-teens on the WFE up-cycle, forward multiple compresses materially.
- Leverage risk: Debt/EBITDA at 3.9x, above the 3.5x threshold. Target 3x by end-2026 via $50M+ quarterly term-loan paydowns and EBITDA growth. Until then, scorecard fails the leverage criterion and capital return is off the table.
Opportunities
- 2027 WFE + fab-construction up-cycle is the central catch-up catalyst (25% of revenue): Fab construction outlook raised from low to high single digits 2026, “meaningful acceleration” 2027. ENTG sees CapEx-driven revenue 9-12 months after groundbreaking. $1B of incremental capacity already built and waiting.
- Content-per-wafer compounding lifts the 75% unit-driven base: 2-nm logic ramp, NAND layer scaling 250→300+ (moly, selective etch), DRAM HBM stacking (CMP, advanced packaging) all drive double-digit content increase per wafer. Advanced packaging now >$100M run-rate — pure upside vs limited historical exposure.
- GM expansion to historical 47-48% drives margin recovery: Q1 46.9% vs Q4 2025 44%. Drivers: productivity, useful-life accounting, KSP/Rockrimmon dilution eliminated by 2027. Pure semi-cycle play — LT revenue growth ceiling ~10-12%, structurally below tools+chemistry peers like MKSI which have non-cycle pockets.
Challenges
- 72x P/E on cyclically-trough earnings leaves no room for cycle delay: A 2027 WFE push-out (slower DRAM ramp, foundry CapEx delay) compresses the multiple fast. R40 only 22%, well below the 40% threshold — scorecard has shown 0-3 passes since 2024. Stock has already moved +82% from trough on outlook alone.
- Mainstream logic recovery slow and mixed (30% of revenue): Utilization 75-80%, memory cost pressure on consumer products. CapEx in China down on tariff pull-forward dislocations. KSP (Taiwan) and Rockrimmon (CO) plants dilutive to margins in 2026; Rockrimmon fully dilutive with little revenue until 2027.
- Net leverage 3.6x still elevated; no shareholder return until 2027: $400M term loan remaining; trajectory to 3x by end-2026 assumes EBITDA growth holds. Iran/Middle East raises noble-gas + resin cost pressure (helium, neon). China local-for-local re-qualification gates ~5-10% of China revenue through 2027.
Next 12 Months
- Q2 2026 guided $815-845M revenue (+5% midpoint), non-GAAP EPS $0.76-0.84; Q3 flash +5% sequential (~$870M). Full year 2026: net interest expense <$190M, CapEx $250M, D&A $140M, share count ~154M. Beat track record: Q1 above midpoint on rev, above high end on GM and EPS.
- Investor Day in NYC early November 2026: First Capital Markets Day under new CEO Dave Reeder. Expect multi-year revenue / margin framework, advanced-packaging detail, capital allocation roadmap. Likely re-rating catalyst if 2028 targets beat consensus.
- KSP (Taiwan) breakeven by end-2026; net leverage to 3x: KSP transitions from dilutive to neutral by Q4 2026, eliminating a ~50-75bps margin headwind. $50M+ quarterly term-loan paydowns drive leverage to 3x. Both are required preconditions for capital return.
Next 12-24 Months
- 2027 fab construction acceleration is the dominant catalyst: ENTG correlated to 12-month-lagged fab construction. New fab announcements through 2026 translate to FOUP, gas purification, and fluid management revenue in 2027. WFE step-up in 2027 supports unit-driven recovery. Could lift CapEx-driven revenue from ~$200M trough to $300M+ run-rate.
- 2-nm production ramp and HBM/CoWoS content compounding: 2-nm carries higher content per wafer; ENTG holds strong POR positions. NAND layer scaling to 300+ layers and DRAM HBM stacking add CMP and chemistry steps. Content per wafer rises double-digit; over 60% of revenue already in advanced logic + memory.
- Capital return optionality unlocks in 2027: Net leverage to 3x end-2026 + KSP profitability + Rockrimmon ramp + new CFO with M&A background combine to open buybacks, dividend initiation, or bolt-on M&A. Each shareholder-return action would re-rate the multiple positively.
Core Metrics Scorecard
| Q3'21 | Q4'21 | Q1'22 | Q2'22 | Q3'22 | Q4'22 | Q1'23 | Q2'23 | Q3'23 | Q4'23 | Q1'24 | Q2'24 | Q3'24 | Q4'24 | Q1'25 | Q2'25 | Q3'25 | Q4'25 | Q1'26 | Q2'26E | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter End | Sep21 | Dec21 | Mar22 | Jun22 | Sep22 | Dec22 | Mar23 | Jun23 | Sep23 | Dec23 | Mar24 | Jun24 | Sep24 | Dec24 | Mar25 | Jun25 | Sep25 | Dec25 | Mar26 | Jun26 |
| R40 > 40% | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ||||||||||||
| R40 accelerate | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ||||||||||
| TTM OP QoQ > 10% | ✅ | ✅ | ||||||||||||||||||
| TTM OP QoQ accelerate | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | |||||||||||
| TTM FCF/OP > 60% | ✅ | ✅ | ✅ | ✅ | ✅ | |||||||||||||||
| Debt/EBITDA < 3.5 | ✅ | ✅ | ✅ | |||||||||||||||||
| Total passes | 2 | 4 | 3 | 1 | 2 | 2 | 1 | 2 | 2 | 0 | 2 | 3 | 1 | 3 | 0 | 0 | 2 | 1 | 3 | 3 |
| Stock QoQ | +2% | +10% | -2% | -31% | -6% | -25% | +25% | +34% | -14% | +28% | +17% | -4% | -15% | -13% | -11% | -7% | +14% | -7% | +25% | +37% |
| P/E(ttm) | 89x | 87x | -2957x | -1338x | 285x | 170x | 62x | 37x | 26x | 34x | 37x | 73x | 54x | 51x | 43x | 41x | 47x | 49x | 56x | 72x |
- ENTG’s scorecard has been weak since 2024 (0-3 passes vs 5-6 at the 2022 peak). R40 has not crossed 40% since Q3 2021; Q1 2026 at 22% and Q2 2026E at 25% show recovery but remain well below the threshold. Stock QoQ has tracked passes loosely: 0-pass quarters (Q1-Q2 2025) lined up with the $82 stock low, while 3 passes in Q1-Q2 2026 line up with the +25% / +37% QoQ rebound.
- FCF/OP and Debt/EBITDA are the swing criteria. FCF/OP rose from 50% (Q2 2025) to 100% (Q1 2026) and 121% (Q2 2026E) as CapEx normalizes; passes Q4 2025 forward. Debt/EBITDA stuck above 3.5x throughout the window — structural Atotech-deal overhang. A 3x leverage exit in late 2026 would unlock this criterion and potentially a 4-5 pass reading the market would reward.
Chart: R40 vs Stock Price (Since 2020)
Chart: Scorecard Total Passes vs Stock Price (Since 2020)
Source: SEC EDGAR annual and quarterly filings, company earnings conference calls and presentations.
Disclaimer: This report is for educational purposes only. NO investment advice.