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Silicon Motion (SIMO) Reports Upbeat Preliminary Q1 Results

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Silicon Motion Technology Corporation SIMO recently reported preliminary first-quarter 2021 results. The company now expects first-quarter revenues to register 25% growth quarter over quarter. Earlier, the company had guided (on Feb 4, 2021) revenue growth in the range of 7-12% on a sequential basis.

For first-quarter 2021, Silicon Motion expects non-GAAP revenues in the range of $154-$161 million. The Zacks Consensus Estimate is currently pegged at $159.2 million, which represents year-over-year growth of 19.9%. Silicon Motion is scheduled to report first-quarter 2021 results on May 5, 2021.

Following the news, Silicon Motion’s shares moved up 6.7% and closed at $69.17 on Apr 8. In the past year, shares of Silicon Motion, which carries a Zacks Rank #2 (Buy), have returned 67.1% compared with industry’s rally of 94%.

Silicon Motion Technology Corporation Price and Consensus

Silicon Motion Technology Corporation Price and Consensus
Silicon Motion Technology Corporation Price and Consensus

Silicon Motion Technology Corporation price-consensus-chart | Silicon Motion Technology Corporation Quote

Growth Drivers

Silicon Motion is one of the leading providers of NAND flash-based controllers for solid-state storage devices or SSDs.

Revenues for the first quarter of 2021 are likely to benefit from continued momentum in SSD controller sales as well as healthy sales of eMMC and UFS controllers.

Notably, higher PC sales sparked by online education and work-from-home wave hold promise. Solid PC shipments are anticipated to drive demand for the company’s PCIe NVMe SSD controllers.

Nonetheless, pandemic-triggered production delays and supply chain constraints are likely to hinder near-term prospects. Underperforming Shannon SSD and Bigtera product lines are added concerns for the company.

Update on Margin Metrics

Non-GAAP gross margin for the quarter is anticipated to be at the high-end of the previously-mentioned guidance of 48-50%. However, the company did not provide any update on its non-GAAP operating margin metrics. It formerly guided non-GAAP operating margin of 21-23%.

Quick Recap of Q4 Performance

For the fourth quarter of 2020, Silicon Motion reported non-GAAP net sales of $143.9 million beat the Zacks Consensus Estimate by 0.6%. On a year-over-year basis, sales declined 6% due to weaker sales of SSD solutions owing to seasonality. However, net sales increased 14% sequentially in the fourth quarter.

Non-GAAP gross margin of 49.3% remained unchanged on a year-over-year basis but expanded 20 basis points (bps) sequentially. Non-GAAP operating margin contracted 240 bps on a year-over-year basis and 110 bps sequentially to 21.9%.

Stocks That Warrant a Look

ome other top-ranked stocks in the broader sector are NVIDIA NVDA, Etsy ETSY and Vishay Intertechnology VSH All the stocks flaunt a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for NVIDIA, Etsy and Vishay is currently pegged at 12.6%, 25.3% and 20.3%, respectively.

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