MagnaChip Semiconductor Corp.
(
MX
) has posted an average earnings surprise of 25.2% over the
trailing four quarters, most recently delivering a beat of 27.8% in
the second quarter of 2012. Moreover, this Zacks #2 Rank (Buy)
provider of analog and mixed signal semiconductor products has a
forward price-to-earnings (P/E) multiple of just 7.5, which makes
it attractive for value investors.
MagnaChip Tops Q2 Estimates
MagnaChip Semiconductor reported second quarter results on August
2, with earnings per share of 46 cents that surpassed the Zacks
Consensus Estimate by a dime. Revenue remained flat from last year
at $202.6 million.
MagnaChip provided an optimistic third quarter guidance. Revenue is
expected to increase 7% - 11% to between $217.0 million and $225.0
million on a sequential basis. Gross margin is projected to
increase 100 - 200 basis points to between 32.0% and 33.0%
sequentially.
The company also announced an extension of the current share
repurchase program through October 2013 (earlier scheduled to be
terminated at the end of October 2012). MagnaChip Board of
Directors also increased the total amount of common stock the
company may purchase by another $25.0 million, with the maximum
limit fixed at $60.0 million.
Earnings Estimates Moving Up
Earnings estimates for 2012 moved higher over the last 60 days. The
Zacks Consensus Estimate jumped 7.8% to $1.80 per share,
representing 11.4% year-over-year earnings growth. For 2013, the
Zacks Consensus Estimate of $1.96 reflects 8.6% year-over-year
earnings growth.
Valuation Continues to Impress
In addition to the low P/E, the stock looks attractive with respect
to a price-sales (P/S) multiple of just 0.7. A P/E below 15.0 and a
P/S ratio less than 1.0 generally suggests a value stock. Moreover,
MagnaChip's PEG ratio of just 0.75 indicates that the stock is
reasonably valued given the expected growth of 10.0%.
Historically, share prices have shown positive correlation to
earnings growth. Therefore, the current estimate trends indicate
that they are headed north.
Seoul, South Korea-based MagnaChip Semiconductor Corp. designs and
manufactures analog and mixed-signal semiconductor products. Its
customers include consumer electronics original equipment
manufacturers (OEMs) such as LG Display, subsystem designers,
contract manufacturers, and analog and mixed-signal semiconductor
companies.
Most of MagnaChip's operating facilities are located in South
Korea. The company primarily sells its products through a direct
sales force and a network of agents and distributors all over
Korea, Japan, Greater China and Europe. MagnaChip earned revenues
of $772.8 million of which 71% was contributed by the direct sales
force.
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