Shares of Cirrus Logic, Inc. (CRUS) are on a great run, buoyed by strong fourth quarter results announced on April 25, 2012. This fabless semiconductor company has a Zacks #1 Rank (Strong Buy).

Currently, the stock is trading around its 52-week high. However, there are chances of further upside based on Cirrus’ projection of solid growth during the second half of fiscal 2013.

Earnings Beat, Outlook Upbeat

Cirrus Logic reported fiscal fourth quarter 2012 earnings per share of 41 cents, beating the Zacks Consensus Estimate by more than 36%. Net sales jumped 21.0% over the comparable prior-year quarter to $110.6 million, inching past the Zacks Consensus Estimate of $110.0 million. Audio Products were the high point, growing 35.2% from the year-ago quarter.

The gross margin improved 610 bps from the year-ago quarter to 56.4%. The operating margin increased 400 bps year over year to 18.9%.

Cirrus remains upbeat about its growth in fiscal 2013, which should benefit from new audio and energy products.

The fiscal first quarter revenue guidance of $96.0 million to $106.0 million represents management’s conservatism. Since the company will launch some new products later in the year, customers are likely to delay purchases, leading to a temporary softening in demand. Therefore, any pullback in the shares on account of this softness represents an excellent buying opportunity.

Following the earnings release, the Zacks Consensus Estimate for the fiscal first quarter has dropped 44.8% to 16 cents, but the estimate for fiscal 2013 shot up 8.9% to $1.50.

Valuation Looks Reasonable

Currently, Cirrus is trading at a premium to most of its peers based on P/E, P/S and PEG. Its strong growth prospects indicate room for further expansion.

Cirrus shares are up 79.8% year to date, compared to a mere 5.2% increase for the S&P 500.

Cirrus shares have traded at a premium to rivals Texas Instruments Inc. (TXN), STMicroelectronics (STM), ON Semiconductor (ONNN) and Maxim Integrated Products (MXIM) year to date.

The significant increase in the stock price in recent months is on account of strong demand for its analog and mixed-signal integrated circuits (IC) for audio products and its rumored win with Apple TV. The stock is currently above its 50 and 200 day moving averages of 27.09 and 22.35, respectively.

Trading volumes are considerably lower than its peers.


Cirrus Logic designs ICs for the audio and energy markets. The major contributor to the company’s revenue is its audio product portfolio. Audio products generate 85.0% of total revenue, while only 15.0% comes from Energy products.

Cirrus has a strong customer base, but the prime customer is Apple with 62.0%, 47.0% and 35.0% revenue contributions in 2012, 2011 and 2010, respectively. The company employs 676 full time employees.

CIRRUS LOGIC (CRUS): Free Stock Analysis Report

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