Tech stocks surged last year in response to increasing demand as people adopted a remote lifestyles. However, because the world is now focused on mass vaccination drives, investors are rotating away from pricey tech stocks to turnaround non-tech stocks with the expectation that outdoor activities will gain traction next. This, along with the optimism surrounding the potential for a V-shaped economic recovery, driving the tech sell-off.
However, analysts expect the tech pullback to be short lived because of the adoption of hybrid work models and a continuation of remote lifestyles will help tech stocks to regain their rally.
Cirrus Logic, Inc. (CRUS)
Headquartered in Austin, Texas CRUS provides integrated circuits (ICs) for audio and voice signal processing applications. The company offers two product lines — Portable Audio and Non-Portable Audio. Its portable audio products include analog and mixed-signal components designed for mobile devices and its non-portable audio and other products include analog and mixed-signal components that target the consumer market. This includes smart home applications and the automotive, energy and industrial markets. CRUS offers its products through both direct and indirect sales channels worldwide .
CRUS’ net sales for its fiscal 2021 third quarter, ended December 26, 2020, was $485.80 million, which represents a 29.7% rise year-over-year. Its gross profit increased 27.3% year-over-year to $251.50 million. The company’s non-GAAP net income for the quarter was $127.76 million, up 49.3% year-over-year. Its non-GAAP operating income was $145.94 million, which represents an improvement of 54.2% year-over-year. Also, its non-GAAP EPS increased more than 51% year-over-year to $2.13.
In terms of non-GAAP forward price/earnings, CRUS is currently trading at 16.38x, 35.3% lower than the industry average 25.32x. In terms of forward price/sales, CRUS is currently trading at 3.19x, 17.6% lower than the industry average 3.87x.
A consensus EPS estimate of $4.62 for fiscal 2021 represents an improvement of 15.8% year-over-year. Also, CRUS surpassed the consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $302.47 million for the quarter ending March 31, 2021 represents an 8.3% rise on a year-over-year basis.
Since Jason Rhode stepped down as the CEO of CRUS on January 1, 2021, John Forsyth has been leading the company as the CEO. The company developed an advanced product portfolio of haptic and sensing ICs in May 2020. The stock has gained 32.1% over the past six months and closed yesterday’s trading session at $75.77.
CRUS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
The stock has an A grade for Value as well and a B grade for Growth, Momentum, and Quality. We have also graded CRUS for Stability and Sentiment. Click here to access all of CRUS’ ratings.
CRUS is ranked #4 of 99 stocks in the B-rated Semiconductor & Wireless Chip industry.
Daktronics, Inc. (DAKT)
Based in Brookings, South Dakota DAKT is a supplier of electronic scoreboards, electronic display systems, digital messaging solutions, software and services for sporting, commercial and transportation applications. The company designs, markets, manufactures, installs and services integrated systems that display real-time data, graphics, animation and video. DAKT operates through five segments — Commercial, Live Events, High School Park and Recreation, Transportation, and International.
The company’s operating expenses decreased more than 28% year-over-year to $24.18 million for its fiscal 2021 third quarter, ended January 30, 2021. This can be attributed primarily to DAKT’s focus on managing its expenses to expected order volumes and lower personnel related costs. Its operating loss was $236,000 versus $9.15 million for the third quarter of fiscal 2020. Also, its net loss came in at $214,000, compared to net loss of $12.73 million for the year-ago period.
In terms of forward enterprise value/sales, DAKT is currently trading at 0.45x, 89.3% lower than the industry average of 4.21x. In terms of forward price/sales, DAKT is currently trading at 0.62x, nearly 84% lower than the industry average of 3.87x.
A consensus EPS estimate of $0.26 for fiscal 2021 represents an improvement of 2500% year-over-year. Moreover, DAKT surpassed the consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $543.09 million for fiscal 2022 represents a 10% rise on a year-over-year basis.
In January, the company partnered with The Phoenix Suns basketball team to manufacture and install an 18-display LED super system totaling 55.1 million LEDs and included a new center hung configuration. In December, DAKT announced that the main video display in the Kauffman Stadium will feature the company’s new LED video installation during the baseball match. The stock has gained 60.7% over the past six months and closed yesterday’s trading session at $6.83.
DAKT’s POWR Ratings reflect its solid prospects. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
The stock has an A grade for Value and a B grade for Sentiment, Momentum and Quality. We have also graded DAKT for Stability and Growth. Click here to access all DAKT’s ratings.
DAKT is ranked #4 of 54 stocks in the B-rated Technology – Communication/Networking industry.
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
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CRUS shares were unchanged in after-hours trading Thursday. Year-to-date, CRUS has declined -5.72%, versus a 5.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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