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Bull of the Day

Silicon Motion Technology (SIMO - Free Report) recently beat the Zacks Consensus Estimate and will report again in late July. The stock is a Zacks Rank #1 (Strong Buy) and today it is the Bull of the Day.

The Numbers

SIMO beat the Zacks Consensus Estimate of $0.55 by $0.07 for a 12% positive earnings surprise. The topline was equally as strong with the company reporting revenues of $113M and that was $8M more than expected tofr 7.7% positive revenue surprise.

Description

Silicon Motion Technology is a fabless semiconductor company. Silicon Motion Technology was founded in 1995 and is headquartered in Zhubei City, Taiwan.

Earnings History

Over the last seven quarters that I have data for, I see the company topped the Zacks Consensus Estimate six times. These were not small beats either, going back to March 2015 we saw a 21% positive earnings surprise, then a 22% surprise followed by 20% and 12%.

On the topline there are a few times with stagnant growth but the most recent quarter saw a nice lift in revenues. The company reported a 7% positive revenue surprise in the most recent quarter and that is something aggressive growth investors like to see.

Estimates

We have seen a recent kick lower to $2.26, but that could be a number just coming out of the consensus.

The 2017 Zacks Consensus Estimate also saw a recent dip but that came after a big move up. The Zacks Consensus Estimate moved from $2.34 in March to $2.71 in April. Since then we have seen the number come in by 4 cents.

Valuation

The valuation is a little stiff for SIMO. 18x forward PE is a little more than the 15x industry average. The price to book multiple of 3.6x is well above the industry average of 2.6x. The price to sales multiple data is exactly the same as the book data.

Chart

Zacks has developed a chart that helps investors see how earnings estimates have impacted the price of the stock over the last several years. We call this chart the price and consensus chart, and each color coded lines represents analyst estimates over a designated year. As estimates increase, the stock tends to follow. The Zacks Rank is impacted by earnings estimate increases, beats and incorporates the idea of analyst agreement and magnitude. As a Zacks Rank #1 (Strong Buy) we see that estimates are moving higher.

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Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Stocks Under $10, an investor service , where he recommends the stocks in the portfolio.

Brian also runs the brand new Zacks Game Changers where he looks for stocks that are disrupting their industries and reaping big gains.

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SILICON MOTION (SIMO) - FREE report >>