Why Cirrus Logic (CRUS) Is Falling Today

NEW YORK (TheStreet) -- Cirrus Logic (CRUS) fell 9% to $17.06 Wednesday following an earnings report that saw earnings fall 39% year over year and guidance was much weaker than anticipated.

In its fiscal third-quarter Apple (AAPL) supplier Cirrus reported earnings of 89 cents a share, beating Thomson Reuters estimates of 77 cents a share. Earnings were down from $1.64 a share in the year-ago quarter, however.

Cirrus also beat analyst estimates in revenue, posting $218.9 million, compared to estimates of $213.3 million. That's far below the $310.1 million in revenue from the year-ago quarter, however.

Looking to its fiscal fourth-quarter, Cirrus expects revenue of between $130 million and $150 million. The company reported revenue of $206.9 million the same quarter last year.

Apple's recent decline may also contribute to Cirrus' decline. Oppenheimer analyst Rich Shufer says the iPhone maker is responsible for at least 80% of the company's total sales.

TheStreet Ratings team rates CIRRUS LOGIC INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CIRRUS LOGIC INC (CRUS) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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 4.31, which clearly demonstrates the ability to cover short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, CIRRUS LOGIC INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 212.77% to $54.39 million when compared to the same quarter last year. In addition, CIRRUS LOGIC INC has also vastly surpassed the industry average cash flow growth rate of -8.40%.
  • CIRRUS LOGIC INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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 ($2.64 versus $1.99).
  • You can view the full analysis from the report here: CRUS Ratings Report

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