Entegris
The supplier of the filters, ultra-pure chemicals and polishing pastes chipmakers use up on every wafer, and of the sealed boxes wafers travel in between steps.
Our viewNeutral Medium conviction
The scores
The profile · 1-4
Growth3/4 ↑
Growing 11.5% and accelerating, but the record is two quarters and revenue is still below where it stood in 2023.
Business quality3/4 →
Qualification is per plant and the largest customer deepened while sales fell, but the materials half is being attacked and its margin fell.
Financial position3/4 ↑
Interest still takes 42% of operating profit, but nothing is due before 2028 and free cash flow repaid $315 million in six months.
Execution record2/4 ↑
Three straight guidance beats under a new chief executive, against two years of falling revenue and a target model about to be rewritten.
Per share capture3/4 →
Share count rises 1.1% a year against 11.5% revenue growth, no convertibles and no share-funded deals, but no buyback offsets it.
Potential2/4 ↑
The prize is real and 7% of it is already held, but nothing is contracted and the next leg is other companies' capital budgets.
Risk profile3/4 ↓
Three concentrations at once: one customer at 16%, China at 21%, goodwill at 95% of equity. None resolves in a single event.
Valuation2/4 ↑
The price needs the guided growth and the margin to hold once slower depreciation stops flattering comparisons, but asks nothing unprecedented.
Evidence quality3/4 →
Central claims are filed facts with four outside issuers behind the machine, but the revenue split and the margin attribution exist only on a call.
The Verdict
We rate Entegris neutral. It sells the filters, chemicals and polishing pastes that are used up making chips, so its sales follow how many wafers factories run. The business is mixed: sales are recovering at a record margin, but part of that record comes from an accounting change that assumes its equipment lasts longer. The price is full, not cheap: it assumes that recovery and more, so a stall would hurt. The view hinges on whether the margin that ignores the accounting change keeps rising. The recovery is real; the earnings are of lower quality than the price assumes, and the bar for the next results is already raised.
The long caseEach newer chipmaking step needs purer materials, so suppliers sell more per wafer; Entegris must show that in a margin rising beyond what its accounting change adds.
The evidence under this - 8 claims
C01facthigh confidence
Entegris sells filters, purifiers, ultra-pure chemicals and gases, polishing slurries and pads, and the sealed carriers wafers travel in, organised in two segments - Materials Solutions and Advanced Purity Solutions.
C02management claimmedium confidence
Management says 75% of revenue is driven by wafer starts and 25% by capital spending, split 10% wafer fab equipment and 15% fab construction.
against this
- The split appears nowhere in the 10-K or the 10-Q and nothing in the filings lets it be checked.
- Revenue fell 8.0% in 2024 and 1.4% in 2025 while wafer starts grew, which is hard to reconcile with three quarters of sales tracking wafer starts unless share or mix moved against the company.
C13facthigh confidence
Net sales were $3,196.6M in 2025 and $3,241.2M in 2024, a fall of 1.4% after a fall of 8.0%.
C20facthigh confidence
Q2 2026 revenue was $883.2M, up 11.5%; operating income $164.6M or 18.6% of sales, up 55.1%; net income $93.6M; reported diluted earnings $0.61 a share against $0.93 adjusted.
C15facthigh confidence
A January 2026 change in estimated useful lives cut depreciation by $18.7M in Q2 2026 and $37.7M in the first half, raising net income by about $15.3M and $23.3M, or $0.10 and $0.15 a diluted share.
against this
- The company gives its reasoning in the filing - an analysis of actual asset usage, obsolescence, historical usage trends and capital plans - and the new lives are not obviously aggressive against industry practice.
- The effect is disclosed in the 10-Q, quantified per share, and repeated on the call in answer to an analyst question. It was not hidden.
- It is a non-cash change and does not touch free cash flow, which rose to $120.3M in the quarter from $47.0M.
C18estimatehigh confidence
Adjusted operating margin rose 3.2 points from FY2025 to Q2 2026 while adjusted profit margin excluding depreciation rose 0.7 points; the 2.5-point gap is exactly the fall in depreciation as a share of sales.
derivedAdjusted operating margin 21.3% for FY2025 and 24.5% in Q2 2026; adjusted EBITDA margin 27.7% and 28.4%; depreciation $205.3M on $3,196.6M of sales (6.42%) falling to $34.4M on $883.2M (3.89%), a fall of 2.53 points against a 2.5-point divergence between the two margin series. All four figures are from the company's own quarterly reconciliation, Exhibit 99.2 to the Q2 2026 8-K.
against this
- Adjusted profit margin excluding depreciation did still rise 0.7 points, so some of the improvement is independent of the accounting change.
- Part of the depreciation fall reflects a capital programme that ended - capital spending halved to $80.8M in the first half from $174.5M - rather than the change in estimate alone. Against that, the 10-Q puts the estimate change at $18.7M in the quarter while total depreciation fell only $16.9M year on year, so the change accounts for more than the whole net fall.
- Gross margin also rose 0.7 points sequentially from Q1 2026 to Q2 2026, a comparison the estimate change cannot flatter because it was already in both quarters.
C35estimatehigh confidence
Enterprise value of $25.06B against trailing-twelve-month reported operating income of $533.7M is about $47 for each dollar of operating profit.
derivedTrailing operating income summed from the company's own quarterly reconciliation: $122.6M in Q3 2025, $104.9M in Q4 2025, $141.6M in Q1 2026 and $164.6M in Q2 2026, giving $533.7M. Enterprise value of $25,062,103,254: the research pack's net debt of $3,213,186,250 added to the market value of the shares at the 20 October 2026 close of $142.90 (the pack itself was struck at $142.14 on 9 September). The quotient is 47.0. On adjusted operating income over the same four quarters - $753.0M - the ratio is 33.3.
against this
- Reported operating income is struck after $184.4M a year of amortisation of intangibles acquired with CMC Materials, which is a real cost of the acquisition and a non-cash one; on the adjusted line the multiple is a third lower.
- The trailing four quarters include the two weakest of the last eight - Q3 and Q4 2025 - so the trailing figure understates the current run rate. Annualising Q2 2026 gives about $658M and a multiple nearer 38.
- 2026-10-06editedRe-struck at the 2026-10-05 close of $166.92 (from $143.03, +16.7%, past the 12% drift trigger) with no print, filing or confirmed development in between: price multiples move, the trailing earnings, profit and share count do not.
- 2026-10-21editedRe-struck at the 2026-10-20 close of $142.90 (from $166.92, -14.4%, past the 12% drift trigger) with no print, filing or confirmed change to the business in between: price multiples move, the trailing earnings, profit, net debt and share count do not.
C19facthigh confidence
Depreciation ran $49.9M, $51.3M, $50.4M and $53.7M through the four quarters of 2025 and then $34.1M and $34.4M in the first two quarters of 2026.
The company
Making a chip takes hundreds of steps, and at each one a stray molecule can ruin the wafer. Entegris sells the filters and purifiers that strip contaminants from the liquids and gases, the slurries and pads that polish each layer flat, and the sealed pods wafers wait in between steps.
A chipmaker cannot skip this; its only choice is whose filter or slurry to use. About 7,700 people make them across roughly 35 factories, backed by about 4,400 patents.
The evidence under this - 3 claims
C01facthigh confidence
Entegris sells filters, purifiers, ultra-pure chemicals and gases, polishing slurries and pads, and the sealed carriers wafers travel in, organised in two segments - Materials Solutions and Advanced Purity Solutions.
C06facthigh confidence
Entegris held about 4,400 active patents worldwide at the end of 2025, about 850 of them United States patents, with about 2,400 applications pending.
C47facthigh confidence
Entegris employed about 7,700 people at the end of 2025, about 1,600 of them in engineering and research, across roughly 35 manufacturing facilities.
How it makes money
It reports two halves: purity products, meaning filters and wafer pods, and materials, meaning slurries and chemicals. Both are consumed as chips are made, so they are bought again and again. Management says 75% of revenue follows wafer starts and 25% follows chipmakers' spending on equipment and new factories. Customers sign no long-term purchase commitments, only share forecasts.
The evidence under this - 3 claims
C01facthigh confidence
Entegris sells filters, purifiers, ultra-pure chemicals and gases, polishing slurries and pads, and the sealed carriers wafers travel in, organised in two segments - Materials Solutions and Advanced Purity Solutions.
C02management claimmedium confidence
Management says 75% of revenue is driven by wafer starts and 25% by capital spending, split 10% wafer fab equipment and 15% fab construction.
against this
- The split appears nowhere in the 10-K or the 10-Q and nothing in the filings lets it be checked.
- Revenue fell 8.0% in 2024 and 1.4% in 2025 while wafer starts grew, which is hard to reconcile with three quarters of sales tracking wafer starts unless share or mix moved against the company.
C03facthigh confidence
Entegris's supply agreements typically do not include long-term purchase commitments; its own 10-K says it works with customers to develop non-binding order forecasts.
against this
- On the Q2 2026 call the chief executive said the company has been approached more recently to engage in more supply agreements given the demand environment, so the position may be changing.
- The 10-K also names short order-to-delivery time as a characteristic of the products, which is a reason customers do not need to commit rather than evidence of weakness.
Where the money comes from, stream by stream
| Stream | Share of sales (FY2025) | How it earns it |
|---|---|---|
| Advanced Purity Solutions | 56.3% | Filters, purifiers and contamination-control systems, and the sealed carriers wafers travel in, sold to chip fabs and the toolmakers that supply them. |
| Materials Solutions | 44.0% | Consumables used up in making chips: polishing slurries and pads, cleaning chemistries, deposition materials and specialty gases, bought per wafer. |
Who runs it
David Reeder has run Entegris since August 2025, taking over from a chief executive who had been with the company since 2001; the finance chief changed twice this year. Insiders own under 1%, and the chief executive almost none. Half the yearly bonus rides on a profit margin that slower depreciation cannot flatter, part on beating the chip market, and the share awards on the stock against other chipmakers. Nothing pays on returns from the money spent.
The evidence under this - 4 claims
C52facthigh confidence
David Reeder became president and chief executive on 18 August 2025, a director since March 2024 with earlier chief financial officer roles at public companies; Bertrand Loy, an executive officer since 2001 and chief executive before him, stayed as executive chair and retired from that role and the board on 31 July 2026, when James Gentilcore became chair.
C53facthigh confidence
The finance chief changed twice in 2026: Linda LaGorga, chief financial officer since 2023, stepped down on 28 February, Michael Sauer served as interim from 1 March, and Sukhi Nagesh, formerly at Nielsen and GlobalFoundries, took the role on 18 May; the president of Materials Solutions retired on 1 June.
C50facthigh confidence
As of 20 March 2026 the 15 directors and executive officers as a group beneficially owned 807,514 shares, under 1% of the 152,248,903 outstanding, including 478,903 they could acquire within 60 days; Bertrand Loy held 393,142 and David Reeder 1,833. BlackRock at 11.6%, T. Rowe Price at 10.0% and Vanguard at 9.9% were the holders above 5%. There is one class of voting stock.
against this
Loy, the largest insider holder, retired and left the board on 31 July 2026 (S21), so the insiders still in place hold less than the group figure, and the chief executive's stake is token.
C51facthigh confidence
The 2025 annual bonus paid on adjusted profit margin before depreciation and amortisation (50%), revenue growth above the company's markets (25%), free cash flow margin (15%) and customer experience (10%), and paid 69.0% of target, nothing on the growth metric. Long-term awards were 40% time-vested shares, 30% options and 30% performance shares on three-year return against the Philadelphia Semiconductor Index; from 2026 performance shares are 60% of the chief executive's award, half of them on three-year free cash flow margin, and options end.
against this
- The 2023 performance shares vested at 90% of target on a 45th-percentile return, so the plan paid near target for middling relative performance.
- Nothing pays on return on capital or per-share results, so the CMC Materials deal's return (C54) costs the plan nothing; the 2026 changes followed a lower say-on-pay vote in 2025.
Why it wins, and who could beat it
Why customers come back
A filter or slurry is approved for one process, at one factory, for one generation of chip. Swapping it means repeating that approval and risking the output of a line worth far more than the material, so the incumbent usually keeps the slot until the process retires. Taiwan Semiconductor's own annual report treats even a supplier's second factory as a separate approval.
The evidence it works: Taiwan Semiconductor went from 11% of Entegris's sales in 2023 to 16% in 2025.
The evidence under this - 2 claims
C04facthigh confidence
Taiwan Semiconductor's own annual report describes a taskforce that works with its primary suppliers to qualify their dual-plant materials - the same supplier's second factory is a separate qualification.
C05facthigh confidence
Taiwan Semiconductor was 16% of Entegris's net sales in 2025, against 11% in 2023, and the top ten customers were 50% against 43%.
The threat
The threat lands on the polishing side. In China, Anji Microelectronics sells the same copper, tungsten and barrier slurries and calls itself a mainstream domestic supplier, and Entegris's own annual report notes buyers moving to local, cheaper supply. Qnity sells the same line to the same factories and names Entegris first among its rivals.
The evidence under this - 3 claims
C07factmedium confidence
Anji Microelectronics sells copper, barrier, dielectric, tungsten and substrate polishing slurries to wafer manufacturing and advanced packaging customers, and says it holds a mainstream supplier position in the Chinese domestic market.
against this
- The statement is Anji's own marketing and no filed figure reachable here sizes it; Anji files on the Shanghai STAR market in Chinese and nothing is served here.
- Entegris's Materials Solutions segment profit margin was 20.9% last quarter against 21.3% a year earlier - a fall consistent with pressure, and equally consistent with the higher raw material, logistics and direct-labour costs management named instead.
C39facthigh confidence
Entegris's own 10-K says industry trends indicate a shift to localised, cost-competitive and consolidated supply chains, and names Cobetter Filtration, Gudeng Precision Industrial and Anji Microelectronics among its competitors.
C08facthigh confidence
Qnity Electronics describes itself as a leading provider of polishing slurries and specialty cleaning chemistries, and names Entegris first among its most notable competitors.
The rivals: Q, LIN, DHR, and 1 more that is private, in-house or listed abroad.
Who else does this, rival by rival
| Ticker | Rival | How far along | Priced against it |
|---|---|---|---|
| Anji Microelectronics (Shanghai) Co., LtdPriced against it: Listed abroad | On sale | Listed abroad | |
| Q | Qnity Electronics, Inc.Priced against it: Same product | On sale | Same product |
| LIN | LindePriced against it: Small part of it | On sale | Small part of it |
| DHR | DanaherPriced against it: Small part of it | On sale | Small part of it |
How big it could get
How big this could get
Chipmakers bought $45.8B of materials for making wafers in 2025, within a $73.2B materials market that grew 6.8%; China alone bought $15.6B. Entegris sold $3.20B that year. Underneath, the volume keeps rising: Taiwan Semiconductor shipped about 15.0 million 12-inch wafers in 2025, up from 12.0 million in 2023.
The evidence under this - 3 claims
C09facthigh confidence
SEMI measured the global semiconductor materials market at $73.2B in 2025, up 6.8%, of which wafer-fabrication materials were $45.8B and packaging materials $27.4B; China was the second largest consuming region at $15.6B.
C13facthigh confidence
Net sales were $3,196.6M in 2025 and $3,241.2M in 2024, a fall of 1.4% after a fall of 8.0%.
C10facthigh confidence
Taiwan Semiconductor shipped 15,022 thousand 12-inch-equivalent wafers in 2025 against 12,002 thousand in 2023, and its 3-nanometer processes went from 6% of wafer revenue to 24% over the same span.
The results
The numbers
Is it growing?Slow
Sales grew 3.2% over the twelve months to Jun 2026, about the same pace as the −1.4% in the year to Dec 2025.
Is it profitable?Healthy
Operating margin is 16%, about where it was (14%) in the year to Dec 2023.
Does growth pay off?Costly
Running costs take 29¢ of each sales dollar, up from 22¢ in the year to Dec 2021.
Does it earn good returns?Low
Each dollar put into the business earns 6.4% a year after tax, down from 18% in the year to Dec 2021.
How steady is it?Swingy
Yearly sales growth has ranged from −8.0% to +43% over the last 5 years, with sales falling in 2 of them.
Are shares being diluted?Creeping
The share count rose 12% in 4.5 years.
All the numbers
Filed figures from the company's 10-K and 10-Q, read 2026-10-04. Fiscal years end in December.
| Dec 2021 | Dec 2022 | Dec 2023 | Dec 2024 | Dec 2025 | 12 mo to Jun 2026 | |
|---|---|---|---|---|---|---|
| Size and growth | ||||||
| Sales | $2.30B | $3.28B | $3.52B | $3.24B | $3.20B | $3.33B |
| Sales growth | +24% | +43% | +7.4% | −8.0% | −1.4% | +3.2% |
| Profit | ||||||
| Gross margin | 46% | 43% | 42% | 46% | 44% | 45% |
| Operating margin | 24% | 15% | 14% | 16% | 14% | 16% |
| Net margin | 18% | 6.4% | 5.1% | 9.0% | 7.4% | 9.2% |
| What growth costs, per sales dollar | ||||||
| Research and development | 7.3% | 7.0% | 7.9% | 9.8% | 10% | 9.6% |
| Selling, general and admin | 13% | 17% | 16% | 14% | 14% | 14% |
| Pay in shares | 1.3% | 2.0% | 1.7% | 2.0% | 2.2% | - |
| Capital spending | 9.2% | 14% | 13% | 9.7% | 9.4% | - |
| Cash | ||||||
| Cash from operations | $400M | $363M | $644M | $632M | $695M | - |
| Free cash flow | $190M | −$103M | $188M | $316M | $396M | - |
| Balance sheet | ||||||
| Cash and short-term investments | $403M | $563M | $457M | $329M | $360M | $354M |
| Debt | $937M | $5.78B | $4.58B | $3.98B | $3.70B | $3.46B |
| Net cash | −$534M | −$5.22B | −$4.12B | −$3.65B | −$3.34B | −$3.10B |
| Returns and shares | ||||||
| Return on capital | 18% | 7.0% | 5.9% | 6.2% | 5.5% | 6.4% |
| Shares (diluted) | 137M | 143M | 151M | 152M | 152M | 154M |
What growth costs
Growth has been getting more expensive. Since 2020 research spending and stock pay grew far faster than sales, so each dollar of sales kept less profit, and the big acquisition added a yearly accounting charge. This year's recovery is clawing some of that back.
The evidence under this - 2 claims
C56facthigh confidence
Per sales dollar, engineering, research and development rose from 7.3 cents in 2020 to 10.3 in 2025 and 9.6 over the four quarters to June 2026, selling, general and administrative went from 14.3 to 14.1 and 14.3, stock pay from 1.2 to 2.2, and capital spending from 7.1 to a 14.2 peak in 2022 and 9.4 in 2025; operating margin fell from 21.3% to 14.3%, then 16.0%, while revenue rose 72% to 2025 and research spending 142%.
sourceEntegris Form 10-K for the fiscal year ended 31 December 2022primaryEntegris Form 10-K for the fiscal year ended 31 December 2025primaryEntegris Form 10-Q for the quarter ended 27 June 2026primary
against this
- Part of the fall in operating margin is acquisition amortisation, $184.4M or 5.8% of 2025 sales (C23), an accounting charge for the CMC Materials deal rather than a cost of growing.
- Revenue fell in 2024 and 2025 (C13), so part of the rise in research per sales dollar is a shrinking denominator; the 2026 recovery has already cut it back.
C23facthigh confidence
FY2025 amortisation of acquired intangibles was $184.4M, 5.8% of sales, against reported operating income of $455.9M or 14.3%.
The last report (4 Aug)
Quarter ended June 2026, filed figures.
11%
Sales growth
against the same quarter a year earlier
8.8%
Growth from the quarter before
against -1.5% the quarter before that
19¢
Operating profit
per dollar of sales
The second quarter of 2026 showed the recovery arriving. Sales grew 11.5% and operating profit 55.1%, with gross margin the highest since early 2022. But the growth came from one half: the filtration business grew 17.0%, while the materials half grew 4.6%, slower than the 7% to 8% rise in wafer starts.
And part of the margin was bookkeeping. Longer assumed equipment lives cut depreciation by $18.7M in the quarter; the finance chief put that at about 1.5 of the 3.2-point gross-margin rise. On the measure that excludes depreciation, the margin rose just 0.7 points since 2025.
What it did to the thesisIt showed the recovery is real, which supports half the case. It also backed the doubt behind the Neutral view: part of the record margin came from assuming equipment lasts longer, growth came from filtration alone, and the materials half grew no faster than the market.
The quarter in detail
Sales growth from the previous quarter, filed figures. The company has restated its own history, so a quarter either side of the restatement may describe a different business; n/c marks one that does not compare.
Earnings per share $0.93 against $0.82 expected; $0.61 as filed, the gap being what the company adds back.
The evidence under this - 7 claims
C20facthigh confidence
Q2 2026 revenue was $883.2M, up 11.5%; operating income $164.6M or 18.6% of sales, up 55.1%; net income $93.6M; reported diluted earnings $0.61 a share against $0.93 adjusted.
C16facthigh confidence
Q2 2026 gross margin was 47.6% against 44.4% a year earlier, a rise of 3.2 percentage points and the highest since early 2022.
C21facthigh confidence
Advanced Purity Solutions grew 17.0% to $514.6M with adjusted segment margin of 30.3% against 24.1%; Materials Solutions grew 4.6% to $371.3M with adjusted segment margin of 20.9% against 21.3%.
against this
- Management expects Materials Solutions to grow more than 10% year over year in both remaining quarters of 2026, so a single quarter's 4.6% may be a comparison effect rather than a trend.
- The company attributed the flat Materials Solutions margin to higher raw material and logistics costs and to planned investment in direct labour, not to price.
C22management claimmedium confidence
Management said Materials Solutions grew about 5% year over year in Q2 2026 while industry wafer starts grew about 7% to 8%, and called that growth in line with the market.
against this
- Management attributed the gap to prior-year comparison effects from tariff-driven pull-forward and said it expects to grow above market in the second half.
- The company's stated model is to beat its markets by 3 to 6 points, so growing in line is a miss against its own target even on management's own framing.
C15facthigh confidence
A January 2026 change in estimated useful lives cut depreciation by $18.7M in Q2 2026 and $37.7M in the first half, raising net income by about $15.3M and $23.3M, or $0.10 and $0.15 a diluted share.
against this
- The company gives its reasoning in the filing - an analysis of actual asset usage, obsolescence, historical usage trends and capital plans - and the new lives are not obviously aggressive against industry practice.
- The effect is disclosed in the 10-Q, quantified per share, and repeated on the call in answer to an analyst question. It was not hidden.
- It is a non-cash change and does not touch free cash flow, which rose to $120.3M in the quarter from $47.0M.
C17management claimmedium confidence
The chief financial officer said about 150 basis points of the year-on-year gross margin uplift came from the change in useful lives.
against this
- Management immediately directed analysts to the sequential comparison instead, which strips the effect out, and pointed to roughly 60% incremental gross-profit flow-through as the right modelling assumption.
- The figure was given in an unscripted answer and is not reconciled anywhere in the filings, so it cannot be checked directly - only bounded by the 10-Q's $18.7M, which is 2.1 points of the quarter's sales.
C18estimatehigh confidence
Adjusted operating margin rose 3.2 points from FY2025 to Q2 2026 while adjusted profit margin excluding depreciation rose 0.7 points; the 2.5-point gap is exactly the fall in depreciation as a share of sales.
derivedAdjusted operating margin 21.3% for FY2025 and 24.5% in Q2 2026; adjusted EBITDA margin 27.7% and 28.4%; depreciation $205.3M on $3,196.6M of sales (6.42%) falling to $34.4M on $883.2M (3.89%), a fall of 2.53 points against a 2.5-point divergence between the two margin series. All four figures are from the company's own quarterly reconciliation, Exhibit 99.2 to the Q2 2026 8-K.
against this
- Adjusted profit margin excluding depreciation did still rise 0.7 points, so some of the improvement is independent of the accounting change.
- Part of the depreciation fall reflects a capital programme that ended - capital spending halved to $80.8M in the first half from $174.5M - rather than the change in estimate alone. Against that, the 10-Q puts the estimate change at $18.7M in the quarter while total depreciation fell only $16.9M year on year, so the change accounts for more than the whole net fall.
- Gross margin also rose 0.7 points sequentially from Q1 2026 to Q2 2026, a comparison the estimate change cannot flatter because it was already in both quarters.
What management did with the money
Debt came down to $3.46B from $3.70B at the end of 2025. Spending on plants halved, lifting free cash flow to $120.3M in the quarter from $47.0M. There was no buyback, and the share count rose 1.1%.
The evidence under this - 3 claims
C28facthigh confidence
Debt was $3,456.0M net of costs against $353.6M of cash at 27 June 2026, down from $3,697.6M at the end of 2025; equity was $4,156.2M and goodwill $3,948.9M.
C30facthigh confidence
First-half 2026 operating cash flow was $339.2M against capital spending of $80.8M, which had been $174.5M a year earlier; Q2 free cash flow was $120.3M, 14% of sales, against $47.0M.
C31facthigh confidence
Diluted shares were 153.6M in Q2 2026 against 151.9M a year earlier, a rise of 1.1%, with $30.8M of dividends paid in the half and no buyback.
The price, and where we disagree
In short. Full. Fair for a recovery that is already here, dear if part of the record profit margin turns out to come from an accounting change: equipment now assumed to last longer.
Share price
$142.14
close,
Price for each $1 of yearly profit
71.3
its 6-year normal 48.5
Company value for each $1 of cash profit
29.0
its 6-year normal 22.7
The shares have returned 57.1% over the past year and sit 23.6% below their high. Analysts expect $1.05 a share for the September quarter, above the top of the company's own $0.96 to $1.04 range, so the bar is already raised.
Two dates decide it. On 29 October the results show whether the margin that ignores depreciation beats 29.0%. On 9 November an investor day brings a rewritten long-term target.
The evidence under this - 4 claims
C34facthigh confidence
At $142.90 (the 20 October 2026 close) the shares are worth $21.85B, $25.06B including net debt, and have returned 57.1% over 252 days while sitting 23.6% below their 252-day high.
- 2026-10-06editedRe-struck at the 2026-10-05 close of $166.92 (from $143.03, +16.7%, past the 12% drift trigger) with no print, filing or confirmed development in between: price multiples move, the trailing earnings, profit and share count do not.
- 2026-10-21editedRe-struck at the 2026-10-20 close of $142.90 (from $166.92, -14.4%, past the 12% drift trigger) with no print, filing or confirmed change to the business in between: price multiples move, the trailing earnings, profit, net debt and share count do not.
C33factmedium confidence
The vendor's analyst panel expects $1.05 a share for Q3 2026, above the top of the company's own filed adjusted range of $0.96 to $1.04, on an estimate of $921.96M against a guided range of $905M to $935M.
C32management claimhigh confidence
Q3 2026 guidance is sales of $905M to $935M, reported diluted earnings of $0.75 to $0.83 a share, adjusted earnings of $0.96 to $1.04, and adjusted profit margin excluding depreciation of 28.0% to 29.0%.
against this
- The company beat its own guidance in each of the last three quarters, most recently on every metric, so the range is likely conservative.
- The guided adjusted profit margin excluding depreciation of 28.0% to 29.0% barely moves on the 28.4% just delivered, despite sales rising 2.5% to 5.9% - implying incremental margin on that measure well below the roughly 60% flow-through management named for gross profit.
C46management claimhigh confidence
Entegris will hold an investor day on 9 November 2026, at which management says it will update its target model.
sourceEntegris Q2 2026 earnings call transcriptprimaryEntegris to host investor day on 9 November 2026primary
against this
- The existing model - beating the company's markets by 3 to 6 points - was not met in 2024 or 2025, when revenue fell, so a rewrite is as likely to reset a target as to raise one.
- Management said only that it would 'color in the lines' on sales strategy and advanced packaging, and gave no indication of direction.
How we read the multiple
Buyers pay 71.7 times a year's earnings, against its own six-year normal of 48.5. Counting debt, the whole company costs about $47 for each $1 of operating profit. That assumes the recovery keeps compounding at record margins.
Two costs from past purchases weigh on the earnings underneath: $184.4M a year written off the value of what was bought, and $199.8M a year of interest on the debt that paid for it.
Against its own history. Dearer than its own normal, at a moment when part of the profit it is priced on comes from longer assumed equipment lives.
The evidence under this - 4 claims
C35estimatehigh confidence
Enterprise value of $25.06B against trailing-twelve-month reported operating income of $533.7M is about $47 for each dollar of operating profit.
derivedTrailing operating income summed from the company's own quarterly reconciliation: $122.6M in Q3 2025, $104.9M in Q4 2025, $141.6M in Q1 2026 and $164.6M in Q2 2026, giving $533.7M. Enterprise value of $25,062,103,254: the research pack's net debt of $3,213,186,250 added to the market value of the shares at the 20 October 2026 close of $142.90 (the pack itself was struck at $142.14 on 9 September). The quotient is 47.0. On adjusted operating income over the same four quarters - $753.0M - the ratio is 33.3.
against this
- Reported operating income is struck after $184.4M a year of amortisation of intangibles acquired with CMC Materials, which is a real cost of the acquisition and a non-cash one; on the adjusted line the multiple is a third lower.
- The trailing four quarters include the two weakest of the last eight - Q3 and Q4 2025 - so the trailing figure understates the current run rate. Annualising Q2 2026 gives about $658M and a multiple nearer 38.
- 2026-10-06editedRe-struck at the 2026-10-05 close of $166.92 (from $143.03, +16.7%, past the 12% drift trigger) with no print, filing or confirmed development in between: price multiples move, the trailing earnings, profit and share count do not.
- 2026-10-21editedRe-struck at the 2026-10-20 close of $142.90 (from $166.92, -14.4%, past the 12% drift trigger) with no print, filing or confirmed change to the business in between: price multiples move, the trailing earnings, profit, net debt and share count do not.
C37factmedium confidence
Trailing valuation is 71.7 times earnings against a six-year median of 48.5, and 29.2 times enterprise value to profit before depreciation and amortisation against a median of 22.7.
against this
- The trailing window contains the trough of the company's own cycle, so a multiple struck on it overstates how demanding the price is against normalised earnings.
- The six-year median spans 2020 to 2025, which includes both the pandemic-era peak and the post-CMC leverage trough; it is a wide and not obviously stable comparison.
- 2026-10-06editedRe-struck at the 2026-10-05 close of $166.92 (from $143.03, +16.7%, past the 12% drift trigger) with no print, filing or confirmed development in between: price multiples move, the trailing earnings, profit and share count do not. The multiples are the pack's 9 September figures scaled to the new close (earnings per share and profit before depreciation held).
- 2026-10-21editedRe-struck at the 2026-10-20 close of $142.90 (from $166.92, -14.4%, past the 12% drift trigger) with no print, filing or confirmed change to the business in between: price multiples move, the trailing earnings, profit, net debt and share count do not. The multiples are the pack's 9 September figures carried to the new close (earnings per share and profit before depreciation held).
C23facthigh confidence
FY2025 amortisation of acquired intangibles was $184.4M, 5.8% of sales, against reported operating income of $455.9M or 14.3%.
C24facthigh confidence
FY2025 interest expense was $199.8M against operating income of $455.9M; pre-tax income was $254.6M, tax $18.0M, and reported diluted earnings $1.55 a share against $2.75 adjusted.
Priced against its rivals
Only Qnity Electronics sells the same thing to the same buyers as a large part of what it does. Linde and Danaher do too, but as a small part of much bigger companies, so their price says little about this one. A price comparison needs at least two, so the price is judged against its own history instead.
Private or foreign rivals that cannot be priced: EMD Performance Materials division of Merck KGaA, Shin-Etsu Polymer Co. Ltd., Electronics Advanced Materials division of Air Liquide, Gudeng Precision Industrial, Anji Microelectronics (Shanghai) Co., Ltd, Mersen, Cobetter Filtration, Aicello Corporation.
Where we disagree with the market
The market believes
A steadier way to own the chip build-out, now turning up with a spending wave and permanently higher margins.
We believe
The recovery is real, but the earnings are lower quality than the price assumes: an accounting change, no contracts, one growing half.
The company prints two margin measures side by side. The one that counts depreciation rose 3.2 points since 2025; the one that ignores it rose 0.7. The gap is exactly the fall in depreciation, and the adjusted earnings figure keeps it in.
We are wrong if the margin that ignores depreciation keeps climbing through 2027 and the materials half grows faster than wafer starts.
What analysts say, and the evidence
The evidence under this - 4 claims
C18estimatehigh confidence
Adjusted operating margin rose 3.2 points from FY2025 to Q2 2026 while adjusted profit margin excluding depreciation rose 0.7 points; the 2.5-point gap is exactly the fall in depreciation as a share of sales.
derivedAdjusted operating margin 21.3% for FY2025 and 24.5% in Q2 2026; adjusted EBITDA margin 27.7% and 28.4%; depreciation $205.3M on $3,196.6M of sales (6.42%) falling to $34.4M on $883.2M (3.89%), a fall of 2.53 points against a 2.5-point divergence between the two margin series. All four figures are from the company's own quarterly reconciliation, Exhibit 99.2 to the Q2 2026 8-K.
against this
- Adjusted profit margin excluding depreciation did still rise 0.7 points, so some of the improvement is independent of the accounting change.
- Part of the depreciation fall reflects a capital programme that ended - capital spending halved to $80.8M in the first half from $174.5M - rather than the change in estimate alone. Against that, the 10-Q puts the estimate change at $18.7M in the quarter while total depreciation fell only $16.9M year on year, so the change accounts for more than the whole net fall.
- Gross margin also rose 0.7 points sequentially from Q1 2026 to Q2 2026, a comparison the estimate change cannot flatter because it was already in both quarters.
C19facthigh confidence
Depreciation ran $49.9M, $51.3M, $50.4M and $53.7M through the four quarters of 2025 and then $34.1M and $34.4M in the first two quarters of 2026.
C21facthigh confidence
Advanced Purity Solutions grew 17.0% to $514.6M with adjusted segment margin of 30.3% against 24.1%; Materials Solutions grew 4.6% to $371.3M with adjusted segment margin of 20.9% against 21.3%.
against this
- Management expects Materials Solutions to grow more than 10% year over year in both remaining quarters of 2026, so a single quarter's 4.6% may be a comparison effect rather than a trend.
- The company attributed the flat Materials Solutions margin to higher raw material and logistics costs and to planned investment in direct labour, not to price.
C22management claimmedium confidence
Management said Materials Solutions grew about 5% year over year in Q2 2026 while industry wafer starts grew about 7% to 8%, and called that growth in line with the market.
against this
- Management attributed the gap to prior-year comparison effects from tariff-driven pull-forward and said it expects to grow above market in the second half.
- The company's stated model is to beat its markets by 3 to 6 points, so growing in line is a miss against its own target even on management's own framing.
What could go wrong, and how we would know
The risks
- China slipping. China sales fell 2% in 2025 to $657.7M, while buyers there shift toward local, cheaper suppliers such as Anji.
- One customer growing bigger. The share gain that shows the moat also concentrates risk: Taiwan Semiconductor is 16% of sales, and the top ten customers 50%, up from 43%.
- Nothing is contracted. Customers share forecasts but commit to no long-term purchases, so nothing protects sales if the chip cycle turns.
- A higher tax bill. The tax rate rose to 15.0% from 5.0% a year earlier, and a global minimum tax makes 15% the floor.
The evidence under this - 6 claims
C12facthigh confidence
China was 21% of Entegris's 2025 sales at $657.7M and fell 2%, while Taiwan was 23% at $735.9M and rose 11% and North America was 18% at $561.5M and fell 16%.
against this
- The 10-K attributes the China fall to lower demand for Advanced Purity Solutions products partly offset by higher Materials Solutions demand, which is the reverse of what a polishing-slurry substitution story would predict.
- Revenue is reported by ship-to location, so a Chinese fab supplied through a Taiwanese or Singaporean entity would not appear in the China row.
C39facthigh confidence
Entegris's own 10-K says industry trends indicate a shift to localised, cost-competitive and consolidated supply chains, and names Cobetter Filtration, Gudeng Precision Industrial and Anji Microelectronics among its competitors.
C07factmedium confidence
Anji Microelectronics sells copper, barrier, dielectric, tungsten and substrate polishing slurries to wafer manufacturing and advanced packaging customers, and says it holds a mainstream supplier position in the Chinese domestic market.
against this
- The statement is Anji's own marketing and no filed figure reachable here sizes it; Anji files on the Shanghai STAR market in Chinese and nothing is served here.
- Entegris's Materials Solutions segment profit margin was 20.9% last quarter against 21.3% a year earlier - a fall consistent with pressure, and equally consistent with the higher raw material, logistics and direct-labour costs management named instead.
C05facthigh confidence
Taiwan Semiconductor was 16% of Entegris's net sales in 2025, against 11% in 2023, and the top ten customers were 50% against 43%.
C03facthigh confidence
Entegris's supply agreements typically do not include long-term purchase commitments; its own 10-K says it works with customers to develop non-binding order forecasts.
against this
- On the Q2 2026 call the chief executive said the company has been approached more recently to engage in more supply agreements given the demand environment, so the position may be changing.
- The 10-K also names short order-to-delivery time as a characteristic of the products, which is a reason customers do not need to commit rather than evidence of weakness.
C26facthigh confidence
The effective tax rate was 15.0% in Q2 2026 against 5.0% a year earlier, and the OECD's global minimum tax sets a 15% floor the company says it is evaluating.
What we still do not know
- Whether the factory-building sales promised for 2027 arrive. A quarter of revenue depends on chipmakers' capital spending, and none of it is contracted.
- How much of the record margin survives once the equipment-lives change is in both years being compared.
The evidence under this - 4 claims
C02management claimmedium confidence
Management says 75% of revenue is driven by wafer starts and 25% by capital spending, split 10% wafer fab equipment and 15% fab construction.
against this
- The split appears nowhere in the 10-K or the 10-Q and nothing in the filings lets it be checked.
- Revenue fell 8.0% in 2024 and 1.4% in 2025 while wafer starts grew, which is hard to reconcile with three quarters of sales tracking wafer starts unless share or mix moved against the company.
C41management claimmedium confidence
Management says the existing manufacturing network can support more than $1 billion of additional sales without new plants, and that it can meet the demand it sees with limited further capital investment.
against this
- Management declined to split the figure between consumable and capital-spending-driven demand, and said only that it is more than $1 billion and broad-based, so it cannot be tested against either half.
- Unlocking it is already costing money: direct labour was raised more than 20% since the end of 2025, and adjusted operating expenses rose to $203.9M in Q2 2026 from $187.9M in Q4 2025 with $211M to $219M guided for Q3.
C15facthigh confidence
A January 2026 change in estimated useful lives cut depreciation by $18.7M in Q2 2026 and $37.7M in the first half, raising net income by about $15.3M and $23.3M, or $0.10 and $0.15 a diluted share.
against this
- The company gives its reasoning in the filing - an analysis of actual asset usage, obsolescence, historical usage trends and capital plans - and the new lives are not obviously aggressive against industry practice.
- The effect is disclosed in the 10-Q, quantified per share, and repeated on the call in answer to an analyst question. It was not hidden.
- It is a non-cash change and does not touch free cash flow, which rose to $120.3M in the quarter from $47.0M.
C18estimatehigh confidence
Adjusted operating margin rose 3.2 points from FY2025 to Q2 2026 while adjusted profit margin excluding depreciation rose 0.7 points; the 2.5-point gap is exactly the fall in depreciation as a share of sales.
derivedAdjusted operating margin 21.3% for FY2025 and 24.5% in Q2 2026; adjusted EBITDA margin 27.7% and 28.4%; depreciation $205.3M on $3,196.6M of sales (6.42%) falling to $34.4M on $883.2M (3.89%), a fall of 2.53 points against a 2.5-point divergence between the two margin series. All four figures are from the company's own quarterly reconciliation, Exhibit 99.2 to the Q2 2026 8-K.
against this
- Adjusted profit margin excluding depreciation did still rise 0.7 points, so some of the improvement is independent of the accounting change.
- Part of the depreciation fall reflects a capital programme that ended - capital spending halved to $80.8M in the first half from $174.5M - rather than the change in estimate alone. Against that, the 10-Q puts the estimate change at $18.7M in the quarter while total depreciation fell only $16.9M year on year, so the change accounts for more than the whole net fall.
- Gross margin also rose 0.7 points sequentially from Q1 2026 to Q2 2026, a comparison the estimate change cannot flatter because it was already in both quarters.
What would change our view
- Neutral→AttractiveGrowth beats wafer starts, at a lower multiple
It needs all of:
- ○The materials half outgrows wafer starts, the margin excluding depreciation passes 29% in a quarter, and 2027 factory-building sales show up.checked at the next results, due by 29 Oct
- ○The shares fall to about 48.5 times earnings, their own six-year norm, from 71.7.about $96.66 today, 32% below the last close
- Neutral→UnattractiveConcentration or China worsens
It needs any of:
- ○Taiwan Semiconductor passes 20% of sales, or the top ten customers pass 55%.checked at the next results, due by 29 Oct
- ○China sales fall again in 2026 while Chinese factories keep buying more materials: share lost, not a market shrinking.checked at the next results, due by 29 Oct
We would also be wrong if
- The margin excluding depreciation never passes 29% in any quarter through 2027.
- The materials half grows slower than wafer starts for three more quarters.
What is coming
- 29 October 2026 Q3 2026 results: Whether adjusted profit margin before depreciation beats the top of 28.0% to 29.0%, the measure the asset-life change cannot flatter, and Materials Solutions grows above 10%.
Every dated event ahead
- 29 October 2026 Q3 2026 results: Whether adjusted profit margin before depreciation beats the top of 28.0% to 29.0%, the measure the asset-life change cannot flatter, and Materials Solutions grows above 10%.
- 9 November 2026 Investor day with a rewritten target model: Whether the new chief executive raises or resets the beat-the-market model missed in 2024 and 2025, and what he says about advanced packaging and spending priorities.
- February 2027 Q4 2026 results and the 2026 annual report: Whether net leverage ends 2026 in the high two times as guided, free cash flow margin holds, and Taiwan Semiconductor and China concentrations move.
Since we wrote this
Written
9 Sep
Price the thesis read
$142.14
9 Sep
- 29 OctEarningsEntegris beat its guidance on sales, earnings and cash margin; sales rose 25%. View heldQ3 2026 results.
- 21 OctPrice moveRe-struck after a 14.4% fall, view unchangedThe shares fell with no new results, so a dollar of operating profit now costs about $47 instead of $54; the sale of a small life sciences unit changes nothing in the case.
- 6 OctPrice moveRe-struck after a 16.7% rise, view unchangedThe shares rose with no new results, so a dollar of operating profit now costs about $54 instead of $47; the 29 October results are still the test.
- 5 OctThesis reviewThe long case now sits under the verdictAfter the five-name pilot, the owner asked for the long case on every thesis.
- 4 OctThesis reviewOwner's checklist: revenue streams, cost of growth, management, catalystsThe owner's checklist found the method silent on who runs the company, what growth costs, where the money comes from and what is dated ahead; this pass fills those four blocks from the proxy and filings.
- 9 SepThesis writtenNeutral, medium convictionWritten five weeks after the June-quarter results lifted the shares 15.5% in a session, with a rewritten long-term target due at November's investor day.
Also checked 3 times with nothing new to act on.
Sources 22
Where this came from
Sources - 22
Every claim above cites one of these, or states the reasoning that derived it. The quote is frozen at the date it was read: a link can rot, and an agent fetch returns a reading of a page rather than the page. Backs counts the whole claim ledger, so it can name a claim this page does not surface.
- S01primarycompany filing2026-02-11the two-segment structure and both segments' three-year sales and profit; the competitor table; the customer concentration table showing Taiwan Semiconductor at 16%; geographic revenue; the full-year income statement and non-GAAP reconciliation; cash taxes paid by jurisdiction; the non-binding order forecast language; patents, headcount and the divestiture historybacksC01C03C05C06C08C12C13C14C23C24C25C39C40C45C47C48C49C54C55C56
- S02primarycompany filing2026-08-04the change in estimated useful lives, the new life ranges by asset class and its quantified effect on depreciation, net income and earnings a share; the effective tax rate reconciliation and the global minimum tax note; the debt note with every instrument, rate and maturity; the future amortisation schedulebacksC15C26C56
- S03primarycompany filing2026-08-04the quarter's income statement, balance sheet and cash flow statement; the segment tables; Q3 2026 guidance on both basesbacksC16C20C28C30C31C32C33
- S04primarycompany filing2026-08-04the seven-quarter series that made the argument possible - adjusted operating margin beside adjusted profit margin excluding depreciation, and depreciation by quarter; both segments' adjusted quarterly margins; the guidance reconciliationbacksC19C21C24C30
- S05primarytranscript2026-08-06Entegris Q2 2026 earnings call transcriptmanagement's answers on the useful-life effect, the revenue split between wafer starts and capital spending, the end-market mix, the capacity claim and the leverage path; nine analysts' questions, which are a separate origin from the answers and produced the useful-life admission
As a reminder, 75% of our revenue is driven by wafer starts and 25% by CapEx. Within CapEx, 10% is driven by WFE and 15% by fab construction.
backsC02C17C22C29C41C42C46C47 - S06primarycompany filing2026-02-10the Q4 2025 reported diluted earnings of $0.32 that the tagged quarterly data does not carry, and the Q1 2026 guidance the year was framed againstread, but no claim rests on it
- S07secondaryvendor data2026-09-09Research pack, ENTG, 9 September 2026price, market value, enterprise value, the trailing multiples against their six-year medians, the returns and volatility, the analyst panel, short interest from FINRA, the insider window and the consensus estimate for Q3 2026backsC33C34C36C37
- S08primarycompany filing2026-04-16the customer's own account of qualifying suppliers' dual-plant materials; wafers shipped in 12-inch equivalents for three years; the 3-nanometer share of wafer revenue; annual capacitybacksC04C10
- S09primaryindustry data2026-05-12the size of the market from outside the company, split between the half Entegris sells into and the half it barely touches, with the regional split that frames the China finding
Global semiconductor materials market revenue increased 6.8% year-over-year to $73.2 billion in 2025. Wafer fabrication materials revenue increased 5.4% to $45.8 billion. Packaging materials revenue grew 9.3% to $27.4 billion in 2025. China ranked second at $15.6 billion, supported by double-digit growth.
backsC09 - S10primarycompany filing2026-02-26a competitor's own description of the same polishing and cleaning products sold to the same fabs, and its competition section naming Entegris firstbacksC08C45
- S11primarycompany filing2026-09-09Anji Microelectronics Technology (Shanghai) - company profile Anji Microelectronicsthe attacker's own account of its product range, its buyers and its position in China - the only primary evidence on the substitution reachable here
copper CMP slurries, barrier CMP slurries, dielectric (both silica-based and ceria-based abrasive) CMP slurries, tungsten CMP slurries, substrate CMP slurries, functional electronic wet chemicals, electroplating solution and its additives. It holds a mainstream supplier position in the domestic market and is strengthening the layout of overseas markets.
backsC07 - S12primarycompany filing2026-02-24Pall's own description of filtration serving microelectronics, and the 2025 statement that filtration core sales rose on microelectronics demand - used to test the cohort perimeterbacksC45
- S13primarycompany filing2026-02-25electronic and specialty gases among its process gases, electronics as one of six end-markets, $33,986M of 2025 sales and no electronics segment - the perimeter judgementbacksC45
- S14primarycompany release2026-08-18the company's account of patent decisions in Taiwan and China on its colloidal-silica polishing technology. The release itself returns 403 to every non-browser client; the substance was read through search results and is treated as a management claim accordinglybacksC44
- S15primarycompany filing2026-08-12the transaction code itself - S, an open-market sale of 2,062 shares at $149.52, with 66,976 retained - checked rather than read off the pack's aggregatebacksC40
- S16primarycompany release2026-08-26Entegris to host investor day on 9 November 2026the date of the investor day at which the target model is to be rewrittenbacksC46
- S17primarycompany filing2023-02-23the terms of the CMC Materials acquisition closed 6 July 2022 and how it was financed; the 2020 to 2022 income and cash flow statements behind the numbers cardbacksC54C55C56
- S18primarycompany filing2026-03-23beneficial ownership as of 20 March 2026 and the holders above 5%; the leadership transition; the 2025 incentive plan's metrics, weights and 69.0% payout; the long-term award mix, the 2023 PSU vesting and the changes for 2026backsC50C51C52
- S19primarycompany filing2026-01-20Linda LaGorga ceasing as chief financial officer on 28 February 2026 and Michael Sauer serving as interim from 1 March 2026backsC53
- S20primarycompany filing2026-04-30Sukhi Nagesh's appointment effective 18 May 2026, his prior roles and his offer letterbacksC53
- S21primarycompany filing2026-07-29Bertrand Loy retiring as executive chair and leaving the board on 31 July 2026; James Gentilcore appointed chairbacksC52
- S22primarycompany filing2026-05-11Daniel Woodland retiring on 1 June 2026 and Olivier Blachier succeeding him as president of Materials SolutionsbacksC53