We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Bull Of the Day: Silicon Motion Technology Corp (SIMO)
Read MoreHide Full Article
Silicon Motion Technology Company (SIMO - Free Report) is a Zacks Rank #1 (Strong Buy) and it was downgraded the other day by a major brokerage. I am not going to mention their name but the initials for Morgan Stanley are MS. The stock tanked at the open, but then recovered throughout the day. Let’s take a deeper look at this stock in this Bull of the Day article.
Description
Silicon Motion Technology Corporation makes and sells NAND flash controllers for solid-state storage devices. It offers solid-state drive (SSDs) used in PCs and other devices, as well as embedded multimediacard (eMMC) and UFS mobile embedded storage used in smartphones. Silicon Motion Technology Corporation was founded in 1995 and is based in Kowloon, Hong Kong.
Downgrade Vs Bull of The Day
I normally don’t do this, but I have to mention that I made SIMO the Bull of the Day on January 15 of this year. On that day, the stock closed at $49.42 and yesterday (the day of the downgrade) it traded as high as $63.71.
That was a long way of saying that the stock rose more than 27% after I made it the Bull of the Day. That was just 4 months ago.
I didn’t see the report from MS, but I have to mention a few things about the chip shortage and how I see that ending soon. First, I saw where one company that is a “supplier” in the chip ecosystem is expecting earnings to soar next quarter. Analysts are been increasing estimates for that company several times of late… so the read through is business is about to pick up.
When the shortage ends, the chip names will probably find buyers again as some investors may have reduced their exposure thinking sales would slow. The fact is demand has remained somewhat constant… but as soon as the shortage is over we should see revenues increase and if margins hold steady EPS will move up as well. Investors tend to buy stocks that see EPS moving higher, so we could expect more capital coming into the chip space.
Earnings History
The first thing I do when I look at stock is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has been able to communicate to the market. A stock that consistently beats is one that has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
For SIMO, I see good history of beating the Zacks Consensus Estimate. There are four beats over the last four quarters.
The average positive earnings surprise over the last fours quarters works out to be 14.48%, which means that they are posting results that are more than what is expected.
Earnings Estimates
The Zacks Rank tells us which stocks are seeing earnings estimates move higher. For SIMO, I see estimates moving higher.
Over the last 60 days I am seeing several increases.
This quarter has moved from $0.97 to $1 to $1.18.
Next quarter has been more stable, but still increasing from $1.10 to $1.32.
The full year has gone from $4.10 to $4.21 to $5.02 and I love seeing that!
Next year has increase from $4.91 to $4.93 to $5.79…once again showing that big lift.
Positive movement in earnings estimates like that are the reason that this stock is a Zacks Rank #1 (Strong Buy).
Valuation
Sometimes the style scores are not all that accurate. This is one of those times and I see a C for growth but the topline is expected to see 55% growth this year and showed 37% growth in the most recent quarter. The forward multiple is only 12.7x and for chips, that is really low. The price to book of 3.7x is very low for the chip space. The price to sales of 3.8x is also very low for the chips space as well.
Chart
Silicon Motion Technology Corporation Price, Consensus and EPS Surprise
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027. Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
Image: Bigstock
Bull Of the Day: Silicon Motion Technology Corp (SIMO)
Silicon Motion Technology Company (SIMO - Free Report) is a Zacks Rank #1 (Strong Buy) and it was downgraded the other day by a major brokerage. I am not going to mention their name but the initials for Morgan Stanley are MS. The stock tanked at the open, but then recovered throughout the day. Let’s take a deeper look at this stock in this Bull of the Day article.
Description
Silicon Motion Technology Corporation makes and sells NAND flash controllers for solid-state storage devices. It offers solid-state drive (SSDs) used in PCs and other devices, as well as embedded multimediacard (eMMC) and UFS mobile embedded storage used in smartphones. Silicon Motion Technology Corporation was founded in 1995 and is based in Kowloon, Hong Kong.
Downgrade Vs Bull of The Day
I normally don’t do this, but I have to mention that I made SIMO the Bull of the Day on January 15 of this year. On that day, the stock closed at $49.42 and yesterday (the day of the downgrade) it traded as high as $63.71.
That was a long way of saying that the stock rose more than 27% after I made it the Bull of the Day. That was just 4 months ago.
I didn’t see the report from MS, but I have to mention a few things about the chip shortage and how I see that ending soon. First, I saw where one company that is a “supplier” in the chip ecosystem is expecting earnings to soar next quarter. Analysts are been increasing estimates for that company several times of late… so the read through is business is about to pick up.
When the shortage ends, the chip names will probably find buyers again as some investors may have reduced their exposure thinking sales would slow. The fact is demand has remained somewhat constant… but as soon as the shortage is over we should see revenues increase and if margins hold steady EPS will move up as well. Investors tend to buy stocks that see EPS moving higher, so we could expect more capital coming into the chip space.
Earnings History
The first thing I do when I look at stock is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has been able to communicate to the market. A stock that consistently beats is one that has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
For SIMO, I see good history of beating the Zacks Consensus Estimate. There are four beats over the last four quarters.
The average positive earnings surprise over the last fours quarters works out to be 14.48%, which means that they are posting results that are more than what is expected.
Earnings Estimates
The Zacks Rank tells us which stocks are seeing earnings estimates move higher. For SIMO, I see estimates moving higher.
Over the last 60 days I am seeing several increases.
This quarter has moved from $0.97 to $1 to $1.18.
Next quarter has been more stable, but still increasing from $1.10 to $1.32.
The full year has gone from $4.10 to $4.21 to $5.02 and I love seeing that!
Next year has increase from $4.91 to $4.93 to $5.79…once again showing that big lift.
Positive movement in earnings estimates like that are the reason that this stock is a Zacks Rank #1 (Strong Buy).
Valuation
Sometimes the style scores are not all that accurate. This is one of those times and I see a C for growth but the topline is expected to see 55% growth this year and showed 37% growth in the most recent quarter. The forward multiple is only 12.7x and for chips, that is really low. The price to book of 3.7x is very low for the chip space. The price to sales of 3.8x is also very low for the chips space as well.
Chart
Silicon Motion Technology Corporation Price, Consensus and EPS Surprise
Silicon Motion Technology Corporation price-consensus-eps-surprise-chart | Silicon Motion Technology Corporation Quote
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027. Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
Download Marijuana Moneymakers FREE >>