Xilinx Inc.’s XLNX shares have added about 3% in yesterday’s trading session, outperforming the market.
In the year-to-date period, its shares have advanced 10.9%, outperforming the industry’s gain of 7.7%.
Before we discuss how investors and analysts have reacted as of late, let's take a quick look at the most recent fundamentals and trends in order to get a better understanding of the important drivers.
Xilinx’s ongoing transition from FPGA provider to an all programmable devices producer is helping it gain market share. The company’s expanding product portfolio, which includes the Zynq RFSoC platform, is aiding it against intense competition from the likes of Intel (INTC). Zynq portfolio, which is implemented in both the 28-nm and 16-nm node, is growth catalyst.
The company also started sampling of the 16-nm RFSoC Silicon In-house family of product, which offers a superior architectural solution to 5G wireless with integrated RF-class analog technology. The product helps in reducing power consumption (50% to 75%) and footprint reduction for future 5G deployments, cable and wireless backhaul applications.
Further, management is optimistic over the demand of Amazon’s AMZN FPGA-as-a-Service (the cloud service is supported by Xilinx’s Ultrascale+ FPGAs) that targets the traditional hardware FPGA designers. Xilinx believes that Amazon’s deployment of SDAccel and SDSoC products will boost competitive position against other SoC providers.
Most recently, the company announced that its software defined development environment, SDAccel, is now available on Amazon Web Services (AWS) for use with Amazon Elastic Compute Cloud (Amazon EC2) F1 instances.
We believe that rising demand for 28-nm, 20-nm and 16-nm nodes is positive for the company.
Xilinx’s expanding software defined programming portfolio along with hardware solutions to accelerate machine learning is expected to drive user base. The company has significant growth opportunities in Data center, 5G deployment, Artificial Intelligence (AI), Industrial IoT and Advanced Driver Assisted Systems (ADAS) applications over the long haul.
Upward Estimate Revisions
In the last 60 days, the Zacks Consensus Estimate for Xilinx’s current quarter and current year witnessed upward revisions. For the current quarter, the Zacks Consensus Estimate is currently pegged at 62 cents, up from earnings of 61 cents earlier. Similarly, the Zacks Consensus Estimate for current year is currently pegged at $2.55 per share compared with $2.50 projected 60 days ago.
Style Scores Look Great
Xilinx currently sports an A grade for Growth, lifting its overall VGM Score to B.
The stock carries a Zacks Rank #3 (Hold). Additionally, the stock has long-term earnings per share growth rate of 9.3%. Notably, the company has posted a positive earnings surprise in the last four quarters with an average beat of 7.4%.
In our opinion, the stock deserves a place in investor’s portfolio and we are expecting an impressive return from the stock in the next few months.
A few better-ranked stocks worth considering are Applied Materials, Inc. AMAT and NVIDIA Corporation NVDA, both sporting s a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term expected EPS growth rate for Applied Materials and NVIDIA is 17.1% and 10.3%, respectively.
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