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Here's Why You Should Retain Xilinx Stock in Your Portfolio

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Xilinx Inc. XLNX has performed on par with the industry last year. Both the stock and the industry have rallied 22% in the mentioned timeframe.

With expected long-term earnings per share growth rate of 9.3% and a market cap of $17.1 billion, it looks like a stock that investors need to hold on to if they are looking to reap long-term gains.

Let’s take a look at some of the factors aiding the company’s performance.

Xilinx’s broad range of high-performance, high-density programmable logic devices have been witnessing accelerated adoption as evident from its top line. The company recorded revenues of $631.2 million in the third quarter of fiscal 2018. The figure was above the mid-point of its guidance range of $615-$645 million (mid-point $630 million), as well as the Zacks Consensus Estimate of $630 million.

Xilinx, Inc. Revenue (TTM)

Xilinx, Inc. Revenue (TTM) | Xilinx, Inc. Quote

The highlight of the quarter was the record quarterly sales figure. It marked the ninth straight quarter of revenue growth. This stellar performance was primarily driven by robust adoption of the company’s 16nm, 20nm and 28nm products.

Notably, Xilinx’s ongoing transition from a FPGA provider to an all-programmable devices producer has been helping the company gain market share. Its expanding product portfolio, which includes the Zynq RFSoC platform, is assisting it to counter intense competition from the likes of Intel INTC.

Amazon AMZN was the first to use Xilinx chips and started offering FPGA-as-a-Service in May 2017. Since then, the company has won five contracts for FPGA-as-a-Service deployments, which, however, haven’t come online yet. The list includes prominent names like Alibaba BABA among others.

However, Xilinx’s two biggest markets, India and China, continue to be challenged by slow wireless deployments. This makes us slightly cautious about its Communication business.

Xilinx currently has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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