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Why Silicon Labs (SLAB) Is Up Today

Stocks in this article: SLAB

NEW YORK (TheStreet) -- Silicon Labs (SLAB) gained 7.9% to $46.43 Wednesday after beating earnings and revenue estimates in its fourth quarter results.

During its fiscal fourth quarter, the chipmaker reported earnings of 49 cents a share, beating the Capital IQ Consensus Estimate of 43 cents a share by 6 cents. Revenue for the quarter fell 4.1% year over year to $146.2 million, but Silicon Labs still beat the consensus estimate of $142.9 million.

Silicon Labs said broad-based revenue was $72.4 million for the quarter, reflecting a record quarter for microcontrollers and wireless. The revenue was offset by lower-than-expected revenue in the weak telecom infrastructure market.

In addition to earnings report, Silicon Labs issued stronger-than-expected guidance for the first quarter of 2014. Silicon Labs expects earnings between 40 and 44 cents a share. Capital IQ Consensus Estimate puts earnings at 41 cents a share for the quarter. The company's revenue guidance is between $142 million and $146 million, compared to analysts' estimate of $141.3 million.

TheStreet Ratings team rates SILICON LABORATORIES INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate SILICON LABORATORIES INC (SLAB) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SLAB's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.26, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 34.8% when compared to the same quarter one year ago, falling from $10.02 million to $6.53 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, SILICON LABORATORIES INC's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: SLAB Ratings Report

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