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TheStreet Open House

Why Cirrus Logic (CRUS) Stock Is Up Today

Stocks in this article: CRUS

NEW YORK (TheStreet) -- Shares of Cirrus Logic Inc. (CRUS) are up 5.4% to $21.75.

The company, which develops analog and mixed-signal integrated circuits for a broad range of consumer and industrial markets, and is a supplier to Apple (AAP), forecast current quarter revenue well above analysts' estimates, helped by strong demand for its audio chips from the iPhone and iPad maker, Reuters reports.

The company had reported a higher-than-expected profit for the second quarter. Over 75% of its total revenue is from Apple.

Cirrus forecast revenue of $135 million to $155 million for the first quarter ending in June.

Analysts on average were expecting $135.5 million, according to Thomson Reuters I/B/E/S.

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

"We rate CIRRUS LOGIC INC (CRUS) 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, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself."

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

  • CRUS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.33, which clearly demonstrates the ability to cover short-term cash needs.
  • CIRRUS LOGIC INC's earnings per share declined by 36.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CIRRUS LOGIC INC increased its bottom line by earning $1.99 versus $1.30 in the prior year. This year, the market expects an improvement in earnings ($2.61 versus $1.99).
  • The share price of CIRRUS LOGIC INC has not done very well: it is down 12.76% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • 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 38.8% when compared to the same quarter one year ago, falling from $67.86 million to $41.50 million.
  • You can view the full analysis from the report here: CRUS Ratings Report
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