Why Is Cirrus Logic (CRUS) Up 1.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Cirrus Logic (CRUS). Shares have added about 1.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cirrus Logic due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Cirrus Logic Q3 Earnings Top Estimates
Cirrus Logic reported third-quarter fiscal 2024 adjusted earnings per share (EPS) of $2.89, which beat the Zacks Consensus Estimate by 43.8%. Also, the bottom line increased 20.4% from the prior-year quarter’s $2.40.
Total revenues of $619 million surpassed the Zacks Consensus Estimate by 14.7% and increased 5% year over year. The uptick was driven by solid sales of components shipping and smartphones, owing to strength in orders from its largest customer.
Segment Details
This Texas-based company rearranged its reportable segments and created separate categories, High-Performance Mixed-Signal and Audio, in the fourth quarter of fiscal 2021. Cirrus Logic is expanding into other applications such as laptops, gaming, tablets and AR/VR.
CRUS’ High-Performance Mixed-Signal segment includes a few of its non-audio products. The segment, which contributed 38.8% to total revenues in the fiscal third quarter, fell 1.2% year over year to $240.4 million.
The Audio segment’s sales increased 9% to $378.6 million and contributed 61.2% to total revenues.
Margins
Non-GAAP gross margin was 51.4%, which expanded 110 basis points (bps) year over year.
Cirrus Logic’s non-GAAP operating expenses rose 2% year over year to $125.6 million.
Non-GAAP operating income of $192.2 million rose 1.1% year over year. Non-GAAP operating profit margin expanded 170 bps to 31.1% from the year-ago quarter.
Balance Sheet and Cash Flow
The company exited the fiscal third quarter with cash and marketable securities of $516.7 million compared with $312.4 million as of Sep 23, 2023.
As of Dec 30, 2023, accounts receivables were $217.2 million compared with $271.9 million as of Sep 23, 2023.
In the fiscal third quarter, CRUS reported $313.7 million of cash flow from operations. In the prior-year quarter, it generated $180.9 million of net cash from operations. Free cash flow was $303.8 million in the quarter under review.
The company repurchased 780,517 shares worth $56.9 million in the reported quarter. As of Dec 30, 2023, it had $365.1 million worth of shares remaining under its existing share repurchase authorization
Outlook
For fourth-quarter fiscal 2024, management projects revenues between $290 million and $350 million. Combined R&D and SG&A are anticipated to be between $138 million and $144 million. Gross margin is expected in the range of 49.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -29.27% due to these changes.
VGM Scores
At this time, Cirrus Logic has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cirrus Logic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Cirrus Logic belongs to the Zacks Electronics - Semiconductors industry. Another stock from the same industry, Advanced Micro Devices (AMD), has gained 23.2% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Advanced Micro reported revenues of $6.17 billion in the last reported quarter, representing a year-over-year change of +10.2%. EPS of $0.77 for the same period compares with $0.69 a year ago.
For the current quarter, Advanced Micro is expected to post earnings of $0.60 per share, indicating no change from the year-ago quarter. The Zacks Consensus Estimate has changed -1.1% over the last 30 days.
Advanced Micro has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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