Strong results and guidance due to very temporary tailwinds in the datacom business as indicated by management on the call. Will be completely gone in FY15.
The "beat & raise" isn't what it seems - analysts didn't factor in the recent acquisition so the upside isn't that material here. And it is solely due to initial IPhone 6 demand which will come back to more normal levels already starting in Q2.
But there are plenty of things that are going in the wrong direction at CRUS and that's why the shares are down. A new 30% tax rate, decreasing margins, Wolfson underperforming expectations, new net debt position are just a few key points here. FY15 eps might decline by around 40% from FY14 levels.
My short term price target remains at $3 but if the company will be able to deliver an even better q4 this has ample upside.
you will of course lose even more as there is not a single catalyst for educated or institutional investors to buy the shares here.
The huge cash position has turned into net debt due to a seemingly ill-timed and perhaps even ill-fated acquisition. No chance for dividends anytime soon.
Ever decreasing margins.
New 30% tax rate.
Initial IPhone 6 ramp soon history with Apple revenues falling back to a more sustainable level going forward (as always).
So I guess peak revenues, lower margins, higher taxes, net debt levels and a major acquisition underperforming expectations by a wide margin arent't the ingredients to make the shares a strong buy.
The shares are expensive at these levels and actually most of the smarter guys in the market are pretty much aware of this fact as evidenced by today's price action. One of the best short ideas in the market currently.
I would like to add that the company won't have the current brandnew IPhone 6 tailwinds caused by initial strong demand for the devices going into 2015. While I suspect the devices to do very well through the whole FY15 the initial shipment levels won't take hold just like already seen in previous IPhone generations. And now that Apple finally gave their customers bigger displays I don't see the upcoming IPhone 7 to repeat the current success by any means.
The only way the company seems somewhat cheap here is using the overall FY2014 expected eps number of $1.99. But that will soon be history.
Going forward into FY2015 margins will be much lower and tax payments will move up from basically zero to a whopping 30% rate. Current FY15 eps estimates still seem way too high here given the new information revealed on the conference call yesterday.
To make things worse the Wolfson acquisition is a major failure at least for now as the business all of a sudden needs huge capital investments while their revenues and margins are falling off a cliff. And despite the troubles at Wolfson they did not renegotiate the purchase price.
The ever decreasing margins with regards to the Apple business are an ongoing theme but clearly they don't help things here either.
So looking to FY15 eps is currently projected to go down 25% to $1.51 but these estimates will soon have to come down significantly given the new margin reality, the Wolfson issues and the huge tax rate increase.
Putting all this together an FY15 eps assumption of $1.30 still looks pretty optimistic here - the truth might come closer to $1.10 to 1.20.
Using the current $19 share price you have a company with decreasing margins, increased tax rate, a poor looking acquisition and still severe customer concentration trading at a forward p/e of around 17.
I don't know of any other company with these characteristics that trades at a p/e that high. I see downside for the shares to around $12 here just to kep their current p/e valuation going into FY15.
I don't see how they would be able to generate cash at these revenue levels. The call was a complete disaster (once more). I wouldn't touch the shares at all.
and not to forget about the new 30% tax rate starting in FY15 which is only partly included in current analyst estimates. FY15 eps estimates of $1.51 look to high here. Taking the number down to $1.30 you have an P/E of above 15 for a company with decreasing margins and earnings.
no - headline numbers from the past just mean nothing but V actually reported a very good quarter and outlook and didn't miss on earnings.
PEIX is just facing margin issues as the former transportation premium is going away as ethanol from the midwest finds its way to the west coast again by rail.
You bought the shares six years ago and didn't take profits once the shares hit $5 ??? What kind of investor are you ???
105-115 but the real problem is the margin guidance and their warning that FY15 revenues will come in lower than expected due to a new business approach of turning down low margin orders.
you just don't get it. Analyst estimates did not account for the Wolfson revenues so the reported revenue upside and guidance is not nearly as huge as it seems on first view. To make things worse the acquisition is already firing back on CRUS as their results will come in significantly below initial expectations going forward with no accretion and required heavy capital spending. Once the initial IPhone 6 demand will be gone CRUS is poised for lower revenues going forward.
I have to admit I feel a bit uncomfortable now as you are also thinking that JAKK is a good investment. I will hold on to the MRGE long though as I could imagine the shares easily hitting $3 within a few weeks.
they would be very happy to get the underperforming Wolfson acquisition and an otherwise completely Apple-centric business with severe margin pressure I guess
no - but the Apple revenue level won't exactly move up going forward and even if they would be able to secure new business (which they haven't for years) with Apple it would come at expense of margins.
I have told so many times here I getting really tired, but: If you want to play Apple just buy APPLE, the shares aren't expensive even at all time highes. But don't stick with this measly supplier who has been losing slots consistently and faces severe margin pressure.