) produces earnings surprises and shows well at CES. The stock is
Zacks #1 Rank (Strong Buy).
CEVA, Inc., engages in designing and licensing silicon intellectual
property for the handsets, portable multimedia, and consumer
electronics markets primarily in Europe, the Middle East, and the
Earnings Surprises Help
CEVA has had a positive earnings surprise in each of the last six
reporting quarters. The impressive has been the percent of the
surprises. While the smallest beat was only $0.01, the percentage
surprise was 8.3% and the stock moved 10%. On average the surprise
percentage has been 22%, suggesting the company will likely
continue to post these positive surprises.
The top line is a slightly different story, as the Zacks Consensus
Estimate has been met in three of the last six quarters and minimal
the beats have been nominal. This suggests that the analysts have a
good handle of the revenue prospects of the company
What we would like to see is more revenue growth. CEVA has reported
revenue of between $13 million and $15 million in each of the last
four quarters. Revenue for the December 2011 quarter is estimated
at $15 million.
Company shows well at CES
A recent report by a covering research analyst noted that they saw
several demos of cell phones that had rich features including high
definition audio and HD video, rich digital imaging and 3D
graphics-rich gaming. These features are the mainstay's of CEVA's
CEVA trades at a premium to the industry on most standard metrics.
The largest premium, as alluded to above, is the price to sales
metric of 11.3x versus a 1.7x industry average. Trading at 31x
forward earnings compared to 13.5x for the industry also shows how
CEVA trades at a rich multiple.
Despite the lofty valuation, when looking at the Price and
Consensus chart, we see that CEVA has seen consistent earnings
growth. There is correlation to expected outperformance when we see
the earnings lines (multi colored) ahead of the stock price. This
is the case CEVA and the stock is a Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for
Zacks.com. He is also the Editor in charge of the
Run Investor service
CEVA INC (
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