Why the Market Dipped But Silicon Motion (SIMO) Gained Today
In the latest close session, Silicon Motion (SIMO) was up +1.09% at $239.40. This move outpaced the S&P 500's daily loss of 0.45%. Meanwhile, the Dow experienced a drop of 0.63%, and the technology-dominated Nasdaq saw a decrease of 0.78%.
Coming into today, shares of the chip company had lost 13.16% in the past month. In that same time, the Computer and Technology sector lost 1.27%, while the S&P 500 lost 1.99%.
The investment community will be closely monitoring the performance of Silicon Motion in its forthcoming earnings report. It is anticipated that the company will report an EPS of $3.3, marking a 230% rise compared to the same quarter of the previous year. At the same time, our most recent consensus estimate is projecting a revenue of $532.81 million, reflecting a 120.17% rise from the equivalent quarter last year.
Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $11.16 per share and revenue of $1.89 billion. These totals would mark changes of +214.37% and +112.86%, respectively, from last year.
Investors should also note any recent changes to analyst estimates for Silicon Motion. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the business outlook.
Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Silicon Motion is holding a Zacks Rank of #1 (Strong Buy) right now.
Investors should also note Silicon Motion's current valuation metrics, including its Forward P/E ratio of 21.23. This valuation marks a premium compared to its industry average Forward P/E of 20.72.
It's also important to note that SIMO currently trades at a PEG ratio of 0.4. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. As the market closed yesterday, the Computer - Integrated Systems industry was having an average PEG ratio of 0.59.
The Computer - Integrated Systems industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 30, putting it in the top 13% of all 250+ industries.
The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
You can find more information on all of these metrics, and much more, on Zacks.com.
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This article originally published on Zacks Investment Research (zacks.com).
