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Cirrus Logic Stock Surges 89% in a Year: Will the Rally Last?
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Cirrus Logic, Inc.’s (CRUS - Free Report) stock is continuing its upward trajectory, with a gain of 89.3% in the past year compared with 23.7% and 58.5% rise of the S&P 500 composite and the sub-industry, respectively.
Closing at $136.63 as of yesterday’s trading session, CRUS stock is currently trading 7.3% below its 52-week high of $147.46 attained on Aug. 29, 2024.
From a valuation perspective, CRUS is trading at a discount. Going by its forward 12-month price-to-earnings ratio, CRUS is trading at a multiple of 20.7, below the industry’s ratio of 31.8 in the past five years.
Image Source: Zacks Investment Research
What Is Driving the CRUS Stock?
Cirrus Logic is a fabless semiconductor supplier that develops low-power, high-precision mixed-signal processing solutions.
Improving financial performance is buoying the stock trajectory. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters with an average surprise of 56.6%.
Cirrus Logic’s top-line performance is gaining from increasing demand for its product portfolio. In the last reported quarter, total revenues of $374 million beat the Zacks Consensus Estimate by 17.7% and soared 18% year over year.
Stronger-than-anticipated shipments into the smartphone market acted as the main catalyst. The company’s largest customer accounted for 88% of total revenues in the last reported quarter.
CRUS also began ramping production of its custom boosted amplifier and first 22-nanometer smart codec ahead of upcoming smartphone launches in the latter half of the year. Expansion into new markets is an additional tailwind.
New Product Launches to Boost Top-line Expansion for CRUS
The company remains focused on product innovation to capture the increasing revenue opportunities. Growing momentum in the laptop market and increasing win designs with its customers on next-generation flagship smartphones bode well.
In June 2024, CRUS launched its latest lineup of digital-to-analog converters (DACs) and an ultra-high-performance audio CODEC. These innovative solutions are specifically crafted for recording artists, live performers and audiophiles, delivering uncompromising sound quality and exceptional performance.
The new additions to the Pro Audio family include the 8-channel DAC CS4308P, 4-channel CS4304P, 2-channel CS4302P and CODEC CS4282P. These devices offer top-notch performance, minimal power consumption and features like hybrid gain control to address the pressing audio challenges that have been rooted in the industry for a long time.
The company plans to make investments in the advanced battery and power technology market related to high-efficiency charging, battery management and system-side power delivery.
These new products should significantly improve the performance of the prior generations. Owing to these factors, the company expects High-Performance Mixed-Signal and Audio SAM to cross $5.7 billion and $3.3 billion, respectively, by 2028.
Strong Outlook Reinforces Confidence in CRUS Stock
For second-quarter fiscal 2025, management expects revenues between $490 million and $550 million. The Zacks Consensus Estimate is pegged at $520 million, up 8.1% year over year. The fiscal second quarter of 2025 begins and ends one week later compared with the prior-year quarter. As a result, it has one week of higher volume production associated with seasonal product ramps.
Combined R&D and SG&A is anticipated to be between $149 million and $155 million. The gross margin is expected to be in the range of 50-52%.
In the past 60 days, analysts have increased their estimates for the current quarter and current year by 17.7% and 8.6%, respectively.
CRUS’ Healthy Balance Sheet
Cirrus Logic is a cash-rich company with a strong balance sheet. As of June 29, 2024, the company had cash and cash equivalents and marketable securities of $491.4 million with no long-term debt. Since CRUS has net cash available on its balance sheet, the existing cash can be used for pursuing strategic acquisitions, investment in growth initiatives and distribution to its shareholders.
The shareholder-repurchase activity is noteworthy. The company repurchased 361,218 shares worth $41 million in the last reported quarter. As of June 29, 2024, CRUS had $274.1 million worth of shares remaining under its existing share repurchase authorization. In fiscal 2024, it bought back shares worth $186 million.
CRUS Faces a Few Headwinds
Increasing expenses particularly higher variable compensation expenses and product development costs likely to weigh on margin performance for this Zacks Rank #3 (Hold) stock. Stiff rivalry and volatile forex movement amid uncertain macroeconomic conditions are other headwinds.
The Zacks Consensus Estimate for MANH’s 2024 EPS is pegged at $4.26, unchanged in the past 30 days. MANH’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 26.6%. The stock has surged 34.3% in the past year.
The Zacks Consensus Estimate for Adobe’s fiscal 2024 EPS is pegged at $18.16, unchanged in the past 30 days. ADBE’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 2.7%. The long-term earnings growth rate is 13%. Its shares have gained 4.8% in the past year.
The Zacks Consensus Estimate for ANSS’ 2024 earnings is pegged at $9.96, unchanged in the past 30 days. ANSS’ earnings beat the Zacks Consensus Estimate in three of the last four quarters while missing the mark once, with the average surprise being 4.8%. Its shares have gained 1.9% in the past year.
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Cirrus Logic, Inc.’s (CRUS - Free Report) stock is continuing its upward trajectory, with a gain of 89.3% in the past year compared with 23.7% and 58.5% rise of the S&P 500 composite and the sub-industry, respectively.
Closing at $136.63 as of yesterday’s trading session, CRUS stock is currently trading 7.3% below its 52-week high of $147.46 attained on Aug. 29, 2024.
From a valuation perspective, CRUS is trading at a discount. Going by its forward 12-month price-to-earnings ratio, CRUS is trading at a multiple of 20.7, below the industry’s ratio of 31.8 in the past five years.
Image Source: Zacks Investment Research
What Is Driving the CRUS Stock?
Cirrus Logic is a fabless semiconductor supplier that develops low-power, high-precision mixed-signal processing solutions.
Improving financial performance is buoying the stock trajectory. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters with an average surprise of 56.6%.
Cirrus Logic’s top-line performance is gaining from increasing demand for its product portfolio. In the last reported quarter, total revenues of $374 million beat the Zacks Consensus Estimate by 17.7% and soared 18% year over year.
Stronger-than-anticipated shipments into the smartphone market acted as the main catalyst. The company’s largest customer accounted for 88% of total revenues in the last reported quarter.
CRUS also began ramping production of its custom boosted amplifier and first 22-nanometer smart codec ahead of upcoming smartphone launches in the latter half of the year. Expansion into new markets is an additional tailwind.
New Product Launches to Boost Top-line Expansion for CRUS
The company remains focused on product innovation to capture the increasing revenue opportunities. Growing momentum in the laptop market and increasing win designs with its customers on next-generation flagship smartphones bode well.
In June 2024, CRUS launched its latest lineup of digital-to-analog converters (DACs) and an ultra-high-performance audio CODEC. These innovative solutions are specifically crafted for recording artists, live performers and audiophiles, delivering uncompromising sound quality and exceptional performance.
The new additions to the Pro Audio family include the 8-channel DAC CS4308P, 4-channel CS4304P, 2-channel CS4302P and CODEC CS4282P. These devices offer top-notch performance, minimal power consumption and features like hybrid gain control to address the pressing audio challenges that have been rooted in the industry for a long time.
The company plans to make investments in the advanced battery and power technology market related to high-efficiency charging, battery management and system-side power delivery.
These new products should significantly improve the performance of the prior generations. Owing to these factors, the company expects High-Performance Mixed-Signal and Audio SAM to cross $5.7 billion and $3.3 billion, respectively, by 2028.
Strong Outlook Reinforces Confidence in CRUS Stock
For second-quarter fiscal 2025, management expects revenues between $490 million and $550 million. The Zacks Consensus Estimate is pegged at $520 million, up 8.1% year over year. The fiscal second quarter of 2025 begins and ends one week later compared with the prior-year quarter. As a result, it has one week of higher volume production associated with seasonal product ramps.
Combined R&D and SG&A is anticipated to be between $149 million and $155 million. The gross margin is expected to be in the range of 50-52%.
In the past 60 days, analysts have increased their estimates for the current quarter and current year by 17.7% and 8.6%, respectively.
CRUS’ Healthy Balance Sheet
Cirrus Logic is a cash-rich company with a strong balance sheet. As of June 29, 2024, the company had cash and cash equivalents and marketable securities of $491.4 million with no long-term debt. Since CRUS has net cash available on its balance sheet, the existing cash can be used for pursuing strategic acquisitions, investment in growth initiatives and distribution to its shareholders.
The shareholder-repurchase activity is noteworthy. The company repurchased 361,218 shares worth $41 million in the last reported quarter. As of June 29, 2024, CRUS had $274.1 million worth of shares remaining under its existing share repurchase authorization. In fiscal 2024, it bought back shares worth $186 million.
CRUS Faces a Few Headwinds
Increasing expenses particularly higher variable compensation expenses and product development costs likely to weigh on margin performance for this Zacks Rank #3 (Hold) stock. Stiff rivalry and volatile forex movement amid uncertain macroeconomic conditions are other headwinds.
Stocks to Consider
Some better-ranked stocks worth consideration in the broader technology space are Manhattan Associates (MANH - Free Report) , Adobe (ADBE - Free Report) and ANSYS (ANSS - Free Report) . While Manhattan Associates sports a Zacks Rank #1 (Strong Buy), Adobe and ANSYS carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MANH’s 2024 EPS is pegged at $4.26, unchanged in the past 30 days. MANH’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 26.6%. The stock has surged 34.3% in the past year.
The Zacks Consensus Estimate for Adobe’s fiscal 2024 EPS is pegged at $18.16, unchanged in the past 30 days. ADBE’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 2.7%. The long-term earnings growth rate is 13%. Its shares have gained 4.8% in the past year.
The Zacks Consensus Estimate for ANSS’ 2024 earnings is pegged at $9.96, unchanged in the past 30 days. ANSS’ earnings beat the Zacks Consensus Estimate in three of the last four quarters while missing the mark once, with the average surprise being 4.8%. Its shares have gained 1.9% in the past year.