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Value

Tracey Ryniec

Kulicke & Soffa Industries, Inc.

KLIC

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Is there any further upside in the semiconductor sector? Kulicke & Soffa Industries, Inc. (KLIC - Snapshot Report) has surprised on estimates the last 7 quarters as the recovery took hold but its last beat was by just 2.4%.

Kulicke & Soffa manufactures semiconductor assembly equipment. Its products include ball banding, die bonding, wedge bonding, manual bonding systems and dicing blades.

In August 2010, Kulicke & Soffa was dirt cheap, trading at just 3x forward estimates. But the stock has since jumped and isn't quite as cheap.

On Jan 7, shares surged more than 10% after an analyst upgraded the company to "outperform" as it expects better-than-seasonal semi-chip volumes.

You can see the hot 6-month chart below.

Both a Growth and a Value Play

Even with the share price spiking, this Zacks #1 Rank (strong buy) is trading at just 9.6x forward estimates.

With a low P/E and strong growth, the company has a PEG ratio of just 0.7.

The fiscal 2011 Zacks Consensus has jumped in the last week on the analyst upgrade and higher estimate revisions to 95 cents from 76 cents. This is still well-below last year's earnings of $2.17 per share, however.

But the earnings recovery is expected to continue in fiscal 2012 with the Zacks Consensus rising to $1.51 from $1.32 in the last week.

That is earnings growth of 59.4%.

Kulicke Beat in the Fourth Quarter

On Nov 10, Kulicke & Soffa reported its fourth quarter results and surprised on the Zacks Consensus by just 2 cents. Earnings per share were 84 cents.

Revenue rose 134.6% to $259.3 million from the same quarter a year ago as the semiconductor industry recovered. Ball bonder net revenue continued to be hot as it rose 19.9% from the fiscal third quarter of 2010.

Outlook for the Fiscal First Quarter

Revenue is expected to decline to the $125 to $135 million range in the December quarter but the company will also be reducing its costs to adjust for the lower revenue levels.

Kulicke is expected to report its fiscal first quarter earnings on Feb 1.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

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