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Why Is Cirrus Logic (CRUS) Down 1.9% Since Last Earnings Report?

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It has been about a month since the last earnings report for Cirrus Logic (CRUS - Free Report) . Shares have lost about 1.9% in that time frame, outperforming the S&P 500.

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

Cirrus Logic’s Q4 Earnings & Revenues Beat Estimates

Cirrus Logic delivered better-than-anticipated fourth-quarter fiscal 2022 results, with the top and bottom lines surpassing the Zacks Consensus Estimate and increasing year over year.

The company reported adjusted earnings of $2.01 per share, beating the Zacks Consensus Estimate by 42.5%. The bottom line rose 204.5% from the prior-year quarter’s 66 cents.

Top-Line Details

Total revenues of $490 million surpassed the Zacks Consensus Estimate by 16.5% and increased 67% year over year.

In the fiscal fourth quarter, the top line was driven by increasing demand for high-performance mixed-signal content shipping for smartphones.

Along with increasing investments in R&D, Cirrus Logic is accelerating sales momentum and executing strategic initiatives, which will help achieve sustainable growth over the next year. As part of its strategic initiatives, the company is consistently focused on strengthening its presence in the technology sector, as well as broadening end-market exposure.The Texas-based company rearranged its reportable segments and created a separate category in fourth-quarter fiscal 2021, namely High-Performance Mixed-Signal and Audio. Cirrus Logic is expanding into other applications such as laptops, gaming, tablets and AR/VR.

Cirrus Logic’s High-Performance Mixed-Signal segment includes a few of its non-audio products. It contributed 33% to total revenues in the fiscal fourth quarter. Revenues from the same division surged 182% year over year to $162.8 million on strong demand for its camera controllers, haptics & sensing, and recently acquired fast-charging solutions.

The Audio segment’s sales increased 38.7% to $327 million and contributed 67% to the total revenues.

Margins

Non-GAAP gross profit of $259 million climbed 74.5% on a year-over-year basis.

Cirrus Logic’s non-GAAP operating expenses rose 16.1% year over year to $123 million.

Non-GAAP operating income of $135.9 million increased 221% year over year. Moreover, the non-GAAP operating profit margin increased to 27.7% from 14.4% reported in the year-ago quarter.

Balance Sheet and Cash Flow

The company exited the fiscal fourth quarter with cash and marketable securities of $380.4 million compared with the $497.9 million seen at the end of the prior-year quarter.

Accounts receivables were $240 million compared with $108.7 million recorded in the prior-year quarter.

In the fiscal fourth quarter, the company reported $258.2 million as net cash provided from operations.

The company repurchased 891,571 shares worth $75 million in the quarter under review. As of Mar 26, 2022, the company has $192.5 million worth of shares remaining under its existing share repurchase authorization.

Outlook

For first-quarter 2023, the company projects revenues between $350 million and $390 million. R&D and SG&A are projected between $147 million and $153 million. The gross margin is expected to be 49-51%.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

The consensus estimate has shifted 247.37% due to these changes.

VGM Scores

At this time, Cirrus Logic has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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 #4 (Sell). We expect a below average return from the stock in the next few months.


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