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Strength Seen in Silicon Motion (SIMO): Can Its 12.4% Jump Turn into More Strength?

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Silicon Motion (SIMO - Free Report) shares rallied 12.4% in the last trading session to close at $105.21. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 0.8% gain over the past four weeks.

Silicon Motion has expanded its SSD controller program engagements with PC OEMs and eMMC/UFS controllers for smartphones, automotive applications and IoT/smart devices. The company is adding to this momentum with the upcoming launch of its next-generation enterprise-class SSD controllers. Silicon Motion’s eMMC is showing strong signals of rebound, thereby adding to the strength of its overall embedded storage market that comprises both SSD controllers and eMMC embedded memory. 

As market trends suggest the balance is tilting from transitioning of eMMC 4.5 toward that of eMMC 5.0, the company foresees lucrative prospects for eMMC 5.1 controller sales. An expanding customer base and innovative products will likely act as tailwinds for the company’s top-line growth, going forward. Over the last 10 years, Silicon Motion has shipped more than five billion controllers cumulatively – more than any other company in the world. On a yearly basis, Silicon Motion ships more than 750 million NAND controllers.

This chip company is expected to post quarterly earnings of $1.31 per share in its upcoming report, which represents a year-over-year change of +44%. Revenues are expected to be $260.55 million, up 36.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Silicon Motion, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on SIMO going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Silicon Motion is part of the Zacks Computer - Integrated Systems industry. Agilysys (AGYS - Free Report) , another stock in the same industry, closed the last trading session 0.8% higher at $117.18. AGYS has returned -8.2% in the past month.

Agilysys' consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.46. Compared to the company's year-ago EPS, this represents a change of +21.1%. Agilysys currently boasts a Zacks Rank of #3 (Hold).


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