Cypress Semiconductor Corp (CY) reported yet another earnings surprise last month and has analysts raising estimates, both factoring into its Zacks #1 Rank (Strong Buy).
The long-term earnings trend is encouraging and the company operates in a red-hot industry.
Company Description
Cypress is an international semiconductor company that offers high-performance, mixed signal, programmable solutions. The company’s products are used in a variety of areas, but the TrueTouch used in the booming tablet market as well as smartphones is the hottest source of growth.
8 in a Row
On Apr 21 Cypress reported its eighth consecutive earnings surprise. Results included a 15% increase in the top line, to $233 million, which is also a 3% sequential growth rate.
Earnings per shares came in at $0.14, 2 cents higher than the Zacks Consensus Estimate. Additionally, Cypress said its book to bill ratio was at 1.07 for the quarter thanks to strong bookings for the next 2 quarters. As a result they should see better than expected seasonal growth.
Estimates Jump
The Zacks Consensus Estimate for this year was up 9 cents on the news, to $0.83. Next year’s average forecast is up 7 cents, to $1.10. If Cypress can hit those marks the annual growth rates will be 70% and 32%, respectively.
Returning Cash to Investors
While not a hallmark of aggressive growth I don’t think the company announcing its first ever dividend precludes it from the group. They will pay out $0.09 per share on Jul 21.
Additionally, Cypress will keep buying shares back and recently added $600 million to the repurchase plan.
The Chart
Below is a 5-year chart that plots the price alongside the annual consensus estimates. You can see that Cypress has bounce back nicely from the recession and is showing a trend of consistent upward revisions.
Also, while the valuation seem high, with a PEG of 2.0, you can see that share were trading much higher the last time estimates were at these levels, so there could be plenty of upside.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service
CYPRESS SEMICON (CY): Free Stock Analysis Report
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