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Silicon Motion (SIMO) Reports Preliminary Results for Q4

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Silicon Motion Technology Corporation (SIMO - Free Report) recently reported preliminary fourth-quarter fiscal 2017 results. The company anticipates revenues at the high end of the previous guidance of $130-$136 million issued on Oct 27, 2017. The Zacks Consensus Estimate for revenues is currently pegged at $133.2 million.

The revenue guidance originally reflected a 2-7% increase on a sequential basis, driven by the comeback of the Client SSD Controller segment and stable SSD Solutions segment.

Moreover, non-GAAP gross margin is now expected to be near the mid-point of the company's original range of 45.5-47.5%.

The company is scheduled to release full fourth-quarter 2017 financial results on Feb 6, 2018.

Silicon Motion Outperforms

Silicon Motion shares have gained 25.8% in the past six months, massively outperforming the industry’s growth of 13.4%.

Last Words

Silicon Motion remains well-poised for growth, driven by synergies from acquisitions and improving NAND supply environment.

Management expects the increase in the availability of 64 layer 3D NAND to bring down the high NAND prices, which will eventually improve the financial results. Enhanced supply of NAND flash is projected to drive growth of Ferri and Shannon SSD solutions. Additionally, as the company’s pipelined product, 2nd generation PCIe NVMe client SSD controllers, enter into production, Client SSD Controller sales are anticipated to increase.

Silicon Motion is active on the acquisitions front too. The company’s buyouts include FCI, Centronix mobile tv and Shannon systems. These acquisitions have helped it to augment foothold in the mobile communications market.

Moreover, the company outshines peers in providing resources for research and development. It develops affordable versions of TLC NAND flash as well as high-density 3D NAND. Moreover, Silicon Motion’s robust liquidity position has allowed the company to undertake diligent capital deployment initiatives that supplement long-term growth.

We also believe that an expanding product portfolio is the key catalyst.

Zacks Rank & Key Picks

Silicon Motion carries a Zacks Rank #3 (Hold). NVIDIA Corporation (NVDA - Free Report) , DXC Technology Company (DXC - Free Report) and Analog Devices, Inc. (ADI - Free Report) are some better-ranked stocks in the same sector. All the three companies flaunt a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA, DXC and Analog Devices have a long-term earnings growth rate of 10.3%, 10.5% and 10.4%, respectively.

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