How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in Silicon Motion (SIMO) ten years ago? It may not have been easy to hold on to SIMO for all that time, but if you did, how much would your investment be worth today?
Silicon Motion's Business In-Depth
With that in mind, let's take a look at Silicon Motion's main business drivers.
Founded in 1995, Silicon Motion Technology Corporation is a leading developer of microcontroller ICs for NAND flash storage devices.
The semiconductor company also designs, develops and markets high-performance, low-power semiconductor solutions for original equipment manufacturers (“OEM”) and other customers.
On May 31, 2019, Silicon Motion announced that it has concluded the sale of mobile communications business (FCI product line) to Dialog Semiconductor Plc. for $45 million.
Post the divestiture, the company’s product portfolio is primarily aimed at SSD controllers in the mobile storage market.
Mobile storage: The main offerings of the market are Embedded memory controllers, SSD controllers & solutions, Flash memory card controllers and USB flash drive controllers.
Embedded memory controllers product offering includes controllers for eMMC and its derivative multi-chip package (“MCP”) embedded memory, which combine NAND flash and mobile DRAM in an integrated solution; controllers for other embedded memory solutions and commercial-grade and industrial-grade products.
On the other hand, SSD controllers and solutions comprises SATA 6Gb/s SSD controllers for both NAND-cache SSDs and full-size client SSDs; controllers for single-chip SSDs and IDE/PATA disk-on-modules (“DOMs”); Ferri single-package SSD solutions, small single-chip SSDs.
Shannon enterprise SSD solutions aimed at enterprise and hyperscale data centers offer high storage capacity, low latency, higher input/output operations per second (IOPS), and high performance capabilities.
Flash memory card controllers offers an extensive line of high-performance controllers for all major flash memory card formats, including Compact Flash (“CF”), SD and Memory Stick (“MS”).
USB flash drive controllers include USB flash drives that are popular in computing and consumer electronics markets for portable storage of files.
Silicon Motion directs considerable resources toward research and development. As of Apr 30, 2020, the company had 1,522 patents (and 1,302 in pending applications) globally.
In 2020, Silicon Motion reported non-GAAP revenues of $539.5 million.
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Silicon Motion a decade ago, you're probably feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in August 2011 would be worth $7,962.60, or a gain of 696.26%, as of August 5, 2021, and this return excludes dividends but includes price increases.
Compare this to the S&P 500's rally of 266.87% and gold's return of 4.81% over the same time frame.
Analysts are anticipating more upside for SIMO.
Silicon Motion is riding on solid demand for its solid state drive controllers as well as eMMC and UFS controllers, the momentum of which continued through the second quarter of 2021. Both earnings and revenues increased year over year. Growing adoption of embedded memory controllers amid uptick in smartphone sales is a positive. Increased PC sales triggered by online learning and work-from-home wave augur well. New design wins for PCIe Gen4 SSD controllers from NAND makers also bode well. Efforts to reward shareholders through dividends are noteworthy. Shares of the company have outperformed the industry in the year-to-date period. Nevertheless, pandemic-led production delays and supply chain constraints are likely to hinder near-term prospects. Stiff competition in the USB flash drive controller market is likely to impede growth.
The stock has jumped 32.17% over the past four weeks. Additionally, no earnings estimate has gone lower in the past two months, compared to 4 higher, for fiscal 2021; the consensus estimate has moved up as well.
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