U.S. Markets close in 2 hrs 26 mins

4 Reasons to Add Infineon Stock to Your Portfolio Right Now

Zacks Equity Research

Infineon Technologies AG IFNNY is one technology stock that continues to exhibit strength in ATV, PMM and IPC segments. In fact, the stock is a lucrative investment option at the moment.

Earnings estimates for Infineon Technologies have exhibited an uptrend, reflecting optimism in the stock’s prospects. The Zacks Consensus Estimate for the company’s current-year earnings has moved up 8 cents to $1.21 per share over the past 60 days. Let us delve deeper and analyze the factors that make this Zacks Rank #1 (Strong Buy) stock a hot pick. You can see the complete list of today’s Zacks #1 Rank stocks here.

Infineon Technologies AG Price

 

Infineon Technologies AG Price | Infineon Technologies AG Quote

What Makes the Stock an Attractive Pick?

Q4 Results

Infineon Technologies reported fourth-quarter fiscal 2018 adjusted earnings of €0.28 per share (or approximately 33 cents per share), up 27.3% from the year-ago quarter, primarily on the back of strong segment result.

Revenues increased 12.5% year over year to €2.047 billion (or almost $2.399 billion) in the reported quarter. Management remains elated on crossing the €2 billion mark in revenues for the first time.

Strength in three of the company’s four business segments, namely, Automotive (“ATV”), Industrial Power Control (“IPC”) and Power Management & Multimarket (“PMM”) drove year-over-year growth. Revenues fared better than management’s guidance.

Robust adoption of advanced driver assistance systems (“ADAS”) and new deal wins hold promise and are anticipated to win investors confidence, going ahead.

Strong Growth Prospects

The company’s Zacks Consensus Estimate for fiscal 2019 earnings of $1.21 reflects year-over-year growth of 6.1%. Moreover, earnings are expected to register an improvement of 7.4% in fiscal 2020.

The stock has long-term expected earnings per share growth rate of 8.6%.

Valuation Looks Rational

The company currently has a trailing 12-month Price/Earnings (P/E) ratio of 16.60. This is quite low compared with the current P/E for the industry that is pegged at 20.70. Its lower-than-market positioning indicates that there is room for an upside in the quarters ahead.

Growth Drivers

Infineon designs, develops, manufactures and markets semiconductors and complete systems solutions. Robust adoption of electric drive train devices, AC/DC and DC/DC conversion, industrial automation appliances are key catalysts. Further, increasing production capacity and demand of products utilized in wind power plants benefited the top line. Favorable seasonal demand for smartphone devices is a positive.

Infineon has been gaining significantly from its acquisition of International Rectifier Corp. This apart, the company expects the global production process to undergo a paradigm shift with the coming of the next industrial revolution, Internet of Things (IoT) and Internet of Services, which will embrace cyber-physical systems. As semiconductors form the very backbone of almost all the present industrial processes, the company remains confident about its future growth prospects.

Other Stocks to Consider

Some other top-ranked stocks in the broader technology sector are Upland Software UPLD, Marvell Technology Group Ltd. MRVL and Twitter, Inc. TWTR, all flaunting a Zacks Rank #1.

Long-term earnings growth rate for Upland Software, Marvell and Twitter is currently pegged at 20%, 9.4% and 22.1%, respectively.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.