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Bull Of The Day: Diodes Inc (DIOD)

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Diodes Incorporated (DIOD - Free Report) is a Zacks  Rank #1 (Strong Buy) that sports an D for Value and B for Growth.  DIODL is the business of semiconductor products for  the automotive and industrial sectors.   The company just reported earnings lastweek, so let’s take a deeper look at this stock in this Bull of the Day article.

Description

Diodes Incorporated is a leading manufacturer and supplier of high-quality discrete and analog semiconductor products, primarily to the communications, computing, industrial, consumer electronics and automotive markets.

Earnings History

When I look at a stock, the first thing I do 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 communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

For DIOD, I see a 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 10%, so the beats are pretty small. 

Earnings Estimates Revisions

The Zacks Rank tells us which stocks are seeing earnings estimates move higher.  For DIOD, I see estimates moving higher.

Over the last 90 days, I see a few increases.

This quarter has moved from $1.17 to $1.43.

Next quarter is at $1.35 and that is up from $1.14.

The full year 2021 is up from $4.76 to $4.94.

Next year has seen an increase from $5.52 to $5.83.

Positive movement in earnings estimates like that is why this stock is a Zacks Rank #1 (Strong Buy).

Valuation

The forward earnings multiple of 21x is pretty low considering the solid 52% year over year growth that was posted in the most recent quarter. A 4x price to book multiple is very low for a name like this as is the 2.8x price to sales multiple.  I see margins moving in the right direction and when that is coupled with solid revenue growth you will get higher earnings.  The higher the earnings go, the bigger the multiple.

Chart

Diodes Incorporated Price, Consensus and EPS Surprise

Diodes Incorporated Price, Consensus and EPS Surprise

Diodes Incorporated price-consensus-eps-surprise-chart | Diodes Incorporated Quote


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