Shares of Synaptics (SYNA - Free Report) have been strong performers lately, with the stock up 5.9% over the past month. The stock hit a new 52-week high of $65.49 in the previous session. Synaptics has gained 72% since the start of the year compared to the 31.5% move for the Zacks Computer and Technology sector and the 44% return for the Zacks Electronics - Semiconductors industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 7, 2019, Synaptics reported EPS of $1.22 versus consensus estimate of $0.73.
For the current fiscal year, Synaptics is expected to post earnings of $4.03 per share on $1.3 billion in revenues. This represents a 1% change in EPS on a -11.87% change in revenues. For the next fiscal year, the company is expected to earn $3.66 per share on $1.24 billion in revenues. This represents a year-over-year change of -9.22% and -4.36%, respectively.
Synaptics may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Synaptics has a Value Score of C. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 15.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 10.2X versus its peer group's average of 11.9X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Synaptics currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Synaptics passes the test. Thus, it seems as though Synaptics shares could still be poised for more gains ahead.
How Does Synaptics Stack Up to the Competition?
Shares of Synaptics have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including FormFactor (FORM - Free Report) , Ichor Holdings (ICHR - Free Report) , and Diodes (DIOD - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 17% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Synaptics, even beyond its own solid fundamental situation.