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Cirrus Logic (CRUS) Up 0.9% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Cirrus Logic (CRUS - Free Report) . Shares have added about 0.9% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cirrus Logic due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Cirrus Logic Crushes Q1 Earnings Estimates, Guides Strong

Cirrus Logic kick start fiscal 2022 on an impressive note, delivering better-than-anticipated first-quarter results. For the quarter, the company posted adjusted earnings of 54 cents per share, comfortably beating the Zacks Consensus Estimate of 39 cents. The bottom-line figure also came in a penny higher than the year-ago quarter earnings of 53 cents.

Revenues

Total revenues of $277.3 million surpassed the Zacks Consensus Estimate of $260.8 million. The top-line also grew 14%, year over year, mainly driven by higher Android-based smartphone volumes, increased laptop sales and higher content games in smartphones.

During the first quarter, rise in penetration of its audio solutions in smartphones was a positive. Additionally, strong momentum in audio and haptic solutions beyond smartphones was a tailwind for the top line.

Cirrus Logic noted that it is making good progress in accelerating sales momentum and execution of strategic initiatives that will help it achieve sustainable growth over the longer term. As part of its strategic initiatives, the company is consistently focusing on deepening penetration to its Android customers and ramped up shipments for the leading laptop original equipment manufacturers (“OEMs”).

In anticipation of product launches in the latter half of 2021, the company also supported the adoption of new content during the first quarter. Management also accelerated the development of new devices that have the potential to fuel revenue growth for the company.

Cirrus Logic rearranged its reportable segments and created a separate category during fourth-quarter fiscal 2021, namely High-Performance Mixed-Signal and Audio.

The company’s High-Performance Mixed-Signal segment includes a few of Cirrus Logic’s non-audio products and accounted for 21.6% of total revenues for the fiscal first quarter. Revenues from the same division jumped 65.8% year on year to $59.9 million on solid strong demand for its camera controllers. The Audio segment sales increased 5.3% to $217.4 million and accounted for 78.4% of the total revenues.

Profits & Margins

Non-GAAP gross profit of $140.2 million climbed 9.8% on a year-over-year basis. Non-GAAP gross margin, however, contracted 200 basis points (bps) to 50.6%.

Cirrus Logic’s non-GAAP operating expenses jumped 11.7% year over year to $103.1 million.

Non-GAAP operating income of $37.1 million increased 5% year over year. However, non-GAAP operating margin of shrunk 120 bps to 13.4%.

Balance Sheet and Cash Flow

The company exited the fiscal first quarter with cash and marketable securities of $445.6 million compared with the $497.9 million seen at the end of the previous quarter.

Accounts receivables were $136.5 million compared with the $108.7 million recorded in the prior quarter. Notably, it did not report any long-term debt as of Jun 26, 2021.

Outlook

For second-quarter fiscal 2022, the company projects revenues between $430 million and $470 million. At the mid-point, the guidance suggests growth of approximately 30%, year over year.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 29.75% due to these changes.

VGM Scores

Currently, Cirrus Logic has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Cirrus Logic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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