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Bull Of The Day: Synaptics (SYNA)

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Synaptics (SYNA - Free Report) is a Zacks Rank #1 (Strong Buy) and following a very big beat, it is a safe bet that the stock will remain a Zacks Rank #1 (Strong Buy).  Earnings beats play a role in the rank, but the movement in earnings estimates is a much more important factor to the Rank.  Let's take a look at why I believe this stock will remain at the strongest Rank for at least the next few weeks.

Description

Synaptics Incorporated develops, markets, and sells intuitive human interface solutions for electronic devices and products worldwide.  The company sells its products through direct sales, outside sales representatives, distributors, and resellers. It serves mobile and PC original equipment manufacturers; Internet of Things manufacturers; and consumer electronics manufacturers. The company was founded in 1986 and is headquartered in San Jose, California.

Recent Report

On February 6, the company reported EPS of $2.04 when the Zacks Consensus Estimate was calling for $1.44.  That 60 cent beat translates into a positive earnings surprise of 41%

Revenues came in at $388M, almost 10% ahead of the Wall Street consensus for revenue.

The company also guided sales for next quarter to $330M - $350M as compared to the Wall Street consensus of $300M at the time of the report.

Earnings History

SYNA has a good history of beathing the number.  I see each of the last four reports have come in ahead of the Zacks Consensus Estimate.  For the most part, the beats are big, as the average positive earnings surprise over the last year is 36%.

Estimate Movement

Wow.  That is all I could say as I look at the estimate moves for SYNA.  The current quarter jumped to $1.47 from $0.69.  That is a huge move for one quarter, but wait, there is more!

Next quarter lifted to $1.06 from $0.66.

The fiscal year moved from $4.00 to $5.78.

Next fiscal year jumped to $5.22 from $4.42.

Those are some huge moves!

Valuation

Those huges moves in estimated EPS have brought the valuation down to great levels. I see 14x forward earnings and a price to book of just about 4x.  Price to sales at only 2x is also a great level.

Margins have moved from 6% to 6.6% and are now at 8% --- and you have to love that as more sales turn into even more EPS.

Chart

Synaptics Incorporated Price, Consensus and EPS Surprise

Synaptics Incorporated Price, Consensus and EPS Surprise

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

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