A month has gone by since the last earnings report for Cirrus Logic (CRUS - Free Report) . Shares have added about 9.8% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Cirrus Logic reported better-than-expected top line and bottom-line results for the first quarter of fiscal 2019, surpassing the Zacks Consensus Estimate.
The company’s non-GAAP earnings per share of 28 cents topped the Zacks Consensus Estimate of 6 cents. However, the figure declined 65.4% year over year due to lower revenues and higher operating expenses.
Total revenues of $254.5 million surpassed the Zacks Consensus Estimate of $231 million. However, the figure was down 20.7% year over year.
Nonetheless, a higher-than-expected demand for portable audio combined with growing momentum of demand for features for enhanced user experience, across the company’s target markets, including flagship and mid-tier smartphones, advanced mobile accessories and in-home connected devices remained positive.
Segment wise, portable audio product revenues (83.4% of the total revenues) came in at $212.3 million, down 24.4% year over year. However, non-portable audio and other products (16.6%) increased 5.5% to $42.2 million.
Non-GAAP gross profit was $124.8 million, which decreased 23% on a year-over-year basis. Gross margin contracted 150 basis points (bps) to 49%.
Cirrus Logic’s non-GAAP operating expenses increased 9.5% on a year-over-year basis to $104.9 million.
Non-GAAP operating income of $19.9 million declined 70%. Moreover, non-GAAP operating margin contracted 1290 bps from the year-ago quarter to 7.8%.
On a non-GAAP basis, Cirrus Logic reported net income of $17.9 million compared with $54.6 million reported in the year-ago quarter. This marked a decline of 67.2%.
The company exited the quarter with cash and cash equivalents of $186.5 million compared with $235.6 million at the end of the previous quarter. Accounts receivables were $126.6 million compared with $100.8 million last quarter. Notably, it did not have any long-term debt during the quarter.
Cirrus Logic provided guidance for second-quarter fiscal 2019.
The company expects revenues between $310 million and $350 million. GAAP gross margin is projected in the range of 48-50%.
The company is optimistic about its diverse product portfolio, and expects to return to growth in fiscal 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 15.5% due to these changes.
At this time, Cirrus Logic has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Cirrus Logic has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.