MagnaChip Semiconductor (MX) has seen limited analyst coverage in the past, but a recent strong beat has helped make the stock a Zacks #1 Rank (Strong Buy).
MagnaChip Semiconductor Corporation designs and manufactures analog and mixed-signal semiconductor products for high-volume consumer applications. The company offers display solutions products, including source and gate drivers, and timing controllers that cover a range of flat panel displays used in liquid crystal displays (LCDs), light emitting diodes (LEDs), 3D televisions and displays, mobile PCs and mobile communications, and entertainment devices. The company is based in Seoul, South Korea.
Three Straight Beats
MX has recorded three straight beats of the Zacks Consensus Estimate, with the average surprise coming in 17% ahead of expectations. The June 2011 quarter saw a beat of $0.07 or almost 15%. September 2011 quarter had a $0.04 positive surprise or a 9.7% beat.
The December 2011 quarter showed earnings surprise momentum with a larger beat than the previous quarter in absolute and percentage terms.
MX Most Recent Reported Earnings
On February 1, 2012 the company reported revenue of $181 million down from $200 million in the previous quarter. In addition, earnings per share came in at $0.26, $0.06 higher than the Zacks Consensus Estimate of $0.20. The beat of 30% was the largest of the last three quarter that had an estimate.
Aggressive growth investors will like what they see when they look at PE. A trailing twelve month multiple of 5.3x compares favorably to the 13x industry average. A 7x forward PE multiple also looks good compared to the 15x industry average. The more conservative metric of price to book has MX trading at a slight premium to the industry average, but price to sales multiple of .5X is a significant discount to the industry average of 1.8x.
A look at the chart shows that MX was not immune to the pressure that most chip companies felt during summer of 2011. Floods in Asia were mostly to blame for that, but that (hopefully) one time event is over. The stock has been in a trading range since the early February earnings release and with low valuation, now is a good time to be long MagnaChip. MX is a Zacks #1 Rank (Strong Buy).