MagnaChip Semiconductor Corp.
) topped earnings estimates by an impressive 120% in its third
quarter, which was also the sixth straight quarter with a positive
surprise. Following the report, this provider of analog and
mixed-signal semiconductor products enjoyed raised earnings
estimate revisions that helped it become a Zacks #1 Rank (Strong
Buy). Moreover, MagnaChip has a forward price-to-earnings (P/E)
multiple of just 6.2, which makes it attractive for value
MagnaChip Crushes Q3 EPS Estimate
On November 1, MagnaChip reported third quarter earnings of $1.39,
soaring past the Zacks Consensus Estimate of 76 cents. Revenue
growth of 10.7% was impressive and in line with the Zacks Consensus
Estimate of $222.0 million.
The year-over-year upside in revenue was primarily driven by strong
performances from Manufacturing Services (up 45% year over year)
and Power Solutions (up 28.4%), which fully offset a weak result
from Display Solutions (down 24.4%).
Gross margin expanded 450 basis points year-over-year to 34.5%,
reflecting a favorable business mix and productivity improvements.
For the fourth quarter, revenue is expected to between $213.0
million and $222.0 million with gross margin of 33.5%- 34.5%.
Earnings Estimates Moving Up
The Zacks Consensus Estimate for 2012 has jumped 20.6% to $2.17 per
share over the last 60 days, representing year-over-year growth of
33.6%. The Zacks Consensus Estimate for 2013 advanced 18.9% to
$2.33 in the same time, reflecting a year-over-year increase of
In addition to a low P/E, the stock looks attractive with respect
to a price-sales (P/S) multiple of just 0.6. A P/E below 15.0 and a
P/S ratio less than 1.0 generally suggest a value stock.
Moreover, MagnaChip's Return on Equity (ROE) of 48.2%, Return on
Investment (ROI) of 22.6% and Return on Asset (ROA) of 13.3% are
all better than the industry averages.
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. 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. The company has a
market cap of $499.84 million and faces significant competition
from Analog Devices (
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