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Technology Stocks : Silicon Motion Inc. (SIMO)
SIMO 79.64-0.2%Jul 16 4:00 PM EDT

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From: Elroy5/2/2024 9:34:47 PM
1 Recommendation

Recommended By
franklin1

   of 2782
 
SIMO reports Q1 in line with their pre-announced guidance, and raises forward full year revenue numbers.

The revenue raise is good, but they're still well below '21 and '22 sales levels. And their expenses are at '22 levels. SIMO is growing nicely compared to some other semi companies, but the profit levels are well below historic levels. They are guiding 2024 operating margin to about 17%. It was closer to 25% give or take in the 5-10 years before the 2023 slump.

Business seems OK, but the valuation of SIMO is pretty high relative to earnings. SIMO usually traded at about 12x, it's today at perhaps 22x. Not sure why.

MXL wanted to buy them for $103 when they were doing sales above $920m per year with operating margins around 27%. They're now doing $850m or so in 2024, with maybe an operating margin of 18% and the after hours price is $79.

Not used to SIMO having an elevated valuation, so I'm not sure what to make of it.
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