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Shares of Silicon Motion Technology Corp. (SIMO - Free Report) have increased almost 13% in the last three trading sessions following the announcement of first-quarter 2017 results. The improvement can be attributed to the company’s quarterly figures, which were better than management expectations.
Silicon Motion reported adjusted earnings of 66 cents per ADS, which remained unchanged from the year-ago quarter but declined 11.5% sequentially. The figure beat the Zacks Consensus Estimate by 9 cents (15.79%).
Net sales increased 13% year over year but declined 11.7% from the previous quarter to $127.3 million. The sequential decline was within management’s guided range and can be attributed to seasonal weakness and NAND supply tightness. However, the figure was slightly better than the Zacks Consensus Estimate of $126 million.
Silicon Motion Technology Corporation Price, Consensus and EPS Surprise
Nevertheless, we note that shares have underperformed the ZacksElectronics Semiconductors industry on a year-to-date basis. While Silicon Motion returned 17.9%, the industry gained 18.5%.
Segment Sales
Sales from mobile storage products (which include Embedded Storage as well as Expandable Storage products) increased 12% year over year but declined 11% quarter over quarter to $116.5 million.
Client SSD controller sales declined almost 20% sequentially but increased about 40% on a year-over-year basis. Moreover, eMMC controller sales remained flat sequentially but increased 15% from the year-ago quarter.
SSD solution sales declined almost 10% sequentially and 20% from the year-ago quarter.
Mobile communications product (which include mobile TV SoCs and handset transceivers) sales were $9.3 million up almost 33% from the year-ago quarter but declined 25.6% from the previous quarter.
Operational Details
Non-GAAP gross margin (including stock-based compensation) expanded more than 30 basis points (bps) on a year-over-year basis and 90 bps sequentially to 50.9%. This was better-than management’s guided range of 48–50.5%. The improvement was due to the utilization of lower-priced NAND inventory.
Operating expenses as percentage of revenues increased 140 bps on year-over-year basis and 150 bps sequentially. As a result, operating margin expanded 150 bps, both from the year-ago quarter and previous quarter to 27% in the reported quarter, slightly higher than management’s guided range of 23–25%.
Liquidity & Cash Flow
Exiting the quarter on Mar 31, Silicon Motion’s cash and cash equivalents increased to $302.5 million from $274.5 million at the end of Dec 31.
The company’s total cash from operating activities for the three-month period ended Mar 31, was $36.9 million, as compared with $34.8 million reported at the end of Dec 31.
Guidance
For second-quarter 2017, Silicon Motion expects non-GAAP sales to be in the range of $134–$140 million, reflecting 5–10% growth on a sequential basis. The anticipated growth is based on strong demand for embedded storage products (80% of revenues) in addition to industrial and hyper-scale SSD solutions.
Non-GAAP gross margin is anticipated within 48.5–55.5%, reflecting higher NAND costs. Moreover, operating margin is projected in the range of 25.5–27.5% for second-quarter 2017. Operating expenses are anticipated to be similar to the figure reported in the first quarter.
For full-year 2017, Silicon Motion anticipates revenues to increase 0–10% from 2016 to $556–$612 million range. Silicon Motion expects significant improvements in NAND flash supply in second-half 2017.
Management expects client SSD controllers to grow 20–25% from over $170 million in 2016. Further, eMMC controller sales are expected to grow about 5% over $170 million in 2016.
SSD solutions sales for the full year are anticipated to decline 15% to 20% from over $80 million in 2016 due to lack of flash availability. Management expects growth from Ferri industrial SSD, while Shannon hyperscale SSDs will continue to decline.
For full-year 2017, gross margin is anticipated within 49–51%, while operating margin is projected in the range of 27.5–29.5%. Operating expenses are expected to grow in line with sales growth. Majority of the operating expenses will be incurred in first-half 2017.
Zacks Rank & Key Pick
Silicon Motion currently carries a Zacks Rank #3 (Hold). Applied Optoelectronics (AAOI - Free Report) , Advanced Micro Devices (AMD - Free Report) and Impinj (PI - Free Report) are better-ranked stocks in the sector. While Applied Optoelectronics sports a Zacks Rank #1 (Strong Buy), AMD and Impinj has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Applied Optoelectronics, AMD and Impinj are pegged at 20%, 6.25% and 25%, respectively.
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Image: Bigstock
Silicon Motion (SIMO) Beats Q1 Earnings, Sales Estimates
Shares of Silicon Motion Technology Corp. (SIMO - Free Report) have increased almost 13% in the last three trading sessions following the announcement of first-quarter 2017 results. The improvement can be attributed to the company’s quarterly figures, which were better than management expectations.
Silicon Motion reported adjusted earnings of 66 cents per ADS, which remained unchanged from the year-ago quarter but declined 11.5% sequentially. The figure beat the Zacks Consensus Estimate by 9 cents (15.79%).
Net sales increased 13% year over year but declined 11.7% from the previous quarter to $127.3 million. The sequential decline was within management’s guided range and can be attributed to seasonal weakness and NAND supply tightness. However, the figure was slightly better than the Zacks Consensus Estimate of $126 million.
Silicon Motion Technology Corporation Price, Consensus and EPS Surprise
Silicon Motion Technology Corporation Price, Consensus and EPS Surprise | Silicon Motion Technology Corporation Quote
Nevertheless, we note that shares have underperformed the ZacksElectronics Semiconductors industry on a year-to-date basis. While Silicon Motion returned 17.9%, the industry gained 18.5%.
Segment Sales
Sales from mobile storage products (which include Embedded Storage as well as Expandable Storage products) increased 12% year over year but declined 11% quarter over quarter to $116.5 million.
Client SSD controller sales declined almost 20% sequentially but increased about 40% on a year-over-year basis. Moreover, eMMC controller sales remained flat sequentially but increased 15% from the year-ago quarter.
SSD solution sales declined almost 10% sequentially and 20% from the year-ago quarter.
Mobile communications product (which include mobile TV SoCs and handset transceivers) sales were $9.3 million up almost 33% from the year-ago quarter but declined 25.6% from the previous quarter.
Operational Details
Non-GAAP gross margin (including stock-based compensation) expanded more than 30 basis points (bps) on a year-over-year basis and 90 bps sequentially to 50.9%. This was better-than management’s guided range of 48–50.5%. The improvement was due to the utilization of lower-priced NAND inventory.
Operating expenses as percentage of revenues increased 140 bps on year-over-year basis and 150 bps sequentially. As a result, operating margin expanded 150 bps, both from the year-ago quarter and previous quarter to 27% in the reported quarter, slightly higher than management’s guided range of 23–25%.
Liquidity & Cash Flow
Exiting the quarter on Mar 31, Silicon Motion’s cash and cash equivalents increased to $302.5 million from $274.5 million at the end of Dec 31.
The company’s total cash from operating activities for the three-month period ended Mar 31, was $36.9 million, as compared with $34.8 million reported at the end of Dec 31.
Guidance
For second-quarter 2017, Silicon Motion expects non-GAAP sales to be in the range of $134–$140 million, reflecting 5–10% growth on a sequential basis. The anticipated growth is based on strong demand for embedded storage products (80% of revenues) in addition to industrial and hyper-scale SSD solutions.
Non-GAAP gross margin is anticipated within 48.5–55.5%, reflecting higher NAND costs. Moreover, operating margin is projected in the range of 25.5–27.5% for second-quarter 2017. Operating expenses are anticipated to be similar to the figure reported in the first quarter.
For full-year 2017, Silicon Motion anticipates revenues to increase 0–10% from 2016 to $556–$612 million range. Silicon Motion expects significant improvements in NAND flash supply in second-half 2017.
Management expects client SSD controllers to grow 20–25% from over $170 million in 2016. Further, eMMC controller sales are expected to grow about 5% over $170 million in 2016.
SSD solutions sales for the full year are anticipated to decline 15% to 20% from over $80 million in 2016 due to lack of flash availability. Management expects growth from Ferri industrial SSD, while Shannon hyperscale SSDs will continue to decline.
For full-year 2017, gross margin is anticipated within 49–51%, while operating margin is projected in the range of 27.5–29.5%. Operating expenses are expected to grow in line with sales growth. Majority of the operating expenses will be incurred in first-half 2017.
Zacks Rank & Key Pick
Silicon Motion currently carries a Zacks Rank #3 (Hold). Applied Optoelectronics (AAOI - Free Report) , Advanced Micro Devices (AMD - Free Report) and Impinj (PI - Free Report) are better-ranked stocks in the sector. While Applied Optoelectronics sports a Zacks Rank #1 (Strong Buy), AMD and Impinj has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Applied Optoelectronics, AMD and Impinj are pegged at 20%, 6.25% and 25%, respectively.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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