Spreadtrum Communications Inc (SPRD) soared on the most recent earnings release, which showed the company scooping up market share.
Company Description
Spreadtrum makes baseband and RF processors and services for the wireless communications market. The company provides customized wireless products to their customers’ needs.
Tripled expectations
On May 17 Spreadtrum reported first-quarter results, leaving investors happy. Revenue soared to $52 million, easily topping the company’s forecast, which had a high end of $43 million.
Spreadtrum earned $6.6 million, or 13 cents per share, up from an $8.3 million loss a year ago. The Zacks Consensus Estimate heading into the report was just 4 cents.
Spreadtrum has beat expectations in 3 of the past 4 quarters, meeting expectations last period.
Estimates Surge
After analysts heard the news and saw just how much market share Spreadtrum is picking up, they drastically revised their estimates. The Zacks #1 Rank (Strong Buy) is expected to make 99 cents this year, up from 28 cents 3 months ago.
Projections for 2011 are averaging $1.10, up 61 cents in that period of time. Compare these levels to a loss of 43 cents last year and you have a terrific turnaround story.
Thanks to the higher forecasts, shares are still a great value. The forward P/E is just under 10 times and the growth is a steal, as the PEG is registering at 0.5. Spreadtrum’s price-to-sales, 3.1 times, is well ahead of the industry average, 5.2 times.
The Chart
Shares of SPRD spiked on the earnings news and have been essentially flat since. However, volume has picked up, which will help sustain the next move higher.
Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service Zacks Investment Research
