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Bull Of The Day: Diodes Incorporated (DIOD)

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Diodes Incporated (DIOD - Free Report) is a Zacks Rank #1 (Strong Buy) and its sports an A got value and growth.  Normally, I like the names that have strong growth scores and weaker value scores as that tells me I am on the right path because growth investors and value investors are looking for different things.  Let's take a look at why this is a Zacks Rank #! (Strong Buy).

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. The Company's corporate sales, marketing, engineering and logistics headquarters is located in Southern California, with two manufacturing facilities in Shanghai, China, a wafer fabrication plant in Kansas City, Missouri, engineering, sales, warehouse and logistics offices in Taipei, Taiwan and Hong Kong, and sales and support offices throughout the world. Diodes, Inc. recently acquired Anachip Corporation, a fabless analog IC company in Hsinchu Science Park, Taiwan. It's product focus is on subminiature surface-mount discrete devices, analog power management ICs and Hall-effect sensors all of which are widely used in end-user equipment.

Earnings History

DIOD has a great history of beating the number. I see four straight beats of the Zacks Consensus Estimate, and the most recent one is the biggest of the bunch.  I see a 13% positive earning surprise that took place back in early May… but with broader market softness, shareholders were not rewarded.

The average positive earnings surprise over the course of the last four reports is a +8.33%.

Estimate Revisions

DIOD has seen a lot of positive earnings estimate revisions.  The current quarter moved up to 75 cents from 67 cents before the most recent earnings report.  The next quarter also saw a nine cent increase as well to bring that number to 80 cents.

The full year 2019 saw a big move of 30 cents, up from $2.50 to $2.80.  That is the type of thing that powers a stock to become a Zacks Rank #1 (Strong Buy).

Valuation

The value style score for DIOD is an A, and let’s take a look at why that is.  I see a 12x forward earnings multiple, which for a chip stock is pretty low.  A 1.67x book multiple is also very low.  At the same time I see a 10% annual top line growth rate and a 1.4x sales multiple.  Operating margins have increased in each of the last two quarters, so things look good here.

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