Fairchild Semiconductor (FCS) shares are surging on the most recent quarterly report. Share of FCS are also a great value as analysts continue to raise estimates.
Company Description
Fairchild Semi makes energy-efficient semiconductors for consumer, communication, automotive and other areas. The company has anything from AC/DC to photo and infrared systems.
Solid Growth
Fairchild reported fourth-quarter results on Jan 21 that showed sales of $355 million, up 7% sequentially and 11% year over year. Adjusted net income came in at $30 million, doubling last year’s total.
Earnings per shares were 23 cents, 6 cents higher than the Zacks Consensus Estimate. This was Fairchild’s sixth straight surprise and the company has not missed in 4 years.
Better Balance Sheet
During the quarter, Fairchild management used strong cash flows to retire debt, often under par, and recorded a $2 million gain on the year. At the end of the year, the debt level was reduced by $63 million, or 12%.
Outlook
Fairchild’s backlog is up about 10% year over year to $369 million. The company is expecting sales to improve to $370 million in the first quarter of 2010, $15 million higher than the previous quarter.
Estimates Pop
Shortly after the quarterly results, Fairchild analysts raised full-year estimates for both 2010 and 2011. The Zacks Consensus Estimate for 2010 is up 25 cents to 90 cents.
Next year analysts are expecting $1.00 per share, up 11 cents. Compare these levels to last years gain of 1 cent.
The Chart
Shares of FCS jumped after the earnings news and could produce a momentum-based buy signal using the MACD. The stock is also a great value at just 9 times 2011 earnings. The price to book is 1.2 times and the price to sales is 1.0, less than half the industry average.
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