Strength Seen in Silicon Motion (SIMO): Can Its 5.2% Jump Turn into More Strength?
Silicon Motion (SIMO) shares ended the last trading session 5.2% higher at $71.84. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 23.5% gain over the past four weeks.
SIMO is likely to benefit from improving order trends increasing customer and end-market rebound optimism. The company expects a healthy uptick in chip sales. Efforts to improve margins by reducing manufacturing costs and discretionary expenses while moving towards high-margin businesses are likely to have buoyed the share price momentum.
This chip company is expected to post quarterly earnings of $0.49 per share in its upcoming report, which represents a year-over-year change of -73.9%. Revenues are expected to be $134.93 million, down 46.5% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For Silicon Motion, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on SIMO going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Silicon Motion is a member of the Zacks Electronics - Semiconductors industry. One other stock in the same industry, Rambus (RMBS), finished the last trading session 3.3% higher at $61. RMBS has returned 3% over the past month.
Rambus' consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.39. Compared to the company's year-ago EPS, this represents a change of -9.3%. Rambus currently boasts a Zacks Rank of #1 (Strong Buy).
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