QS Research · Michael Burry's Scion Capital analyst template · 2006
ENTEGRIS INC (ENTG)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -34% · downside -54% · upside +18%
At $127.98 the market is capitalizing TTM EBITDA of $797.8M at 28.2x and TTM earnings at 49.8x, a premium to every peer with real EBITDA except distorted COHU and above AMAT/KLAC despite a fraction of their EBITDA. The business is genuinely better than its past—APS is now roughly 60% of Q3 2026 sales, Q3 sales rose 24.6%, and adjusted EBITDA margin hit 30.2%—but the price already discounts continued 20%+ growth. I use section 13's TTM base, not a normalized average: 20x EV/EBITDA on $797.8M gives $15.96B EV, less ~$3.00B net debt, or $12.96B equity / 152.80M shares = ~$84.80 (-33.7%); 15x gives ~$58.69 (-54.1%); upside requires ~$1.0B EBITDA at 26x = ~$150.53 (+17.6%). That meets the short rule (base at least -30%, upside no more than +25%), but conviction is not high because the upside case is still positive; this is a valuation short, not a business-quality short.
Key numbers
- Share price: $127.98
- Market cap: $19.56B
- Latest financial period: TTM to Sep 26, 2026
- Revenue (TTM): $3.52B
- EV / EBITDA (TTM): 28.2x
- P/E (TTM): 49.8x
The 15 boxes
- ✓ 1. Long-form business notes
ENTG sells critical advanced materials and process/purity solutions into semiconductor manufacturing. The latest FY2025 10-K reports two operating segments, Materials Solutions and Advanced Purity Solutions, versus three segments (SCEM, MC, AMH) in the FY2020 10-K. The FY2020 10-K disclosed that about 70% of 2020 revenue was unit-driven/recurring, with over 15,000 products and top 10 customers at roughly 46% of net sales; FY2025 revenue was $3.20B, operating income $455.9M, net income $235.6M, and operating cash flow $695.4M. The portfolio was reshaped by CMC-related divestitures, including EC for $675.3M in October 2023 and PIM for net proceeds of $256.2M in March 2024.
- ✓ 2. Competitive advantage
ENTG shows a real, if modest, durable advantage: its products are specified into customers' processes and switching is described as costly and yield-risky, it holds a broad portfolio with no single product platform above 3% of 2025 sales, ~4,400 active patents, and management claims no global competitor spans its full offering. The financial record is supportive but not spectacular: gross profit held at $1.42B on $3.20B revenue in FY2025 versus $1.50B on $3.52B in FY2023, while operating income fell to $455.9M from $533.9M, so the moat protects the franchise rather than expanding margins. Cash conversion is the strongest evidence — FY2025 operating cash flow $695.4M against capex $299.2M and D&A $205.3M — but customer concentration (TSMC 16% of 2025 net sales) and an increasingly consolidated customer base are the counterweight.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-26) was a strong volume-driven quarter: net sales $1,005.7 million, up 24.6% year over year, with gross margin up 6.2 points to 49.7% and operating income more than 80% higher at $230.6 million. Margin expansion is partly structural (volume, operating leverage) and partly accounting/policy-driven: a January 2026 increase in useful lives cuts 2026 depreciation by about $73.0 million, and tariff refunds also helped. Cash generation improved (9M 2026 operating cash flow $606.0 million vs $503.4 million) and debt fell as Term Loan B was fully repaid; the main new risks flagged are tariffs/trade policy and flat China sales.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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