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Cirrus Logic (CRUS) Up 14.4% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Cirrus Logic (CRUS). Shares have added about 14.4% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important drivers.

Cirrus Logic Q4 Earnings Top Estimates

Cirrus Logic reported fourth-quarter fiscal 2024 adjusted earnings per share (EPS) of $1.24, which beat the Zacks Consensus Estimate by 85.1%. Also, the bottom line increased 34.7% from the prior-year quarter’s 92 cents.

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Total revenues of $371.8 million surpassed the Zacks Consensus Estimate by 16.2% but decreased 0.3% year over year. The downtick was due to a reduction of general market and custom components, primarily in non-smartphone applications.

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 39% to total revenues in the fiscal fourth quarter, rose 3.4% year over year to $145.1 million.

The Audio segment’s sales decreased 2.5% to $226.6 million and contributed 61% to total revenues.

Margins

Non-GAAP gross margin was 51.9%, which expanded 180 basis points (bps) year over year.

Cirrus Logic’s non-GAAP operating expenses fell 2.8% year over year to $116.5 million.

Non-GAAP operating income of $76.5 million rose 14.3% year over year. Non-GAAP operating profit margin expanded 270 bps to 20.6% from the year-ago quarter.

Balance Sheet and Cash Flow

The company exited the fiscal fourth quarter with cash and marketable securities of $526.5 million compared with $516.7 million as of Dec 30, 2023.
As of Mar 30, 2024, accounts receivables were $162.4 million compared with $217.2 million as of Dec 30, 2023.

In the fiscal fourth quarter, the company reported $170.5 million of cash flow from operations. In the prior-year quarter, it generated $48.3 million of net cash from operations. Free cash flow was $162.8 million in the quarter under review.

The company repurchased 548,000 shares worth $50 million in the reported quarter. As of Mar 30, 2024, it had $315.1 million worth of shares remaining under its existing share repurchase authorization.

Outlook

For first-quarter fiscal 2025, management projects revenues between $290 million and $350 million. Combined R&D and SG&A are anticipated to be between $142 million and $148 million. Gross margin is expected to be in the range of 49.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

The consensus estimate has shifted 21.88% due to these changes.

VGM Scores

At this time, Cirrus Logic has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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, Silicon Motion (SIMO), has gained 1.6% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.

Silicon Motion reported revenues of $189.31 million in the last reported quarter, representing a year-over-year change of +52.6%. EPS of $0.64 for the same period compares with $0.33 a year ago.

For the current quarter, Silicon Motion is expected to post earnings of $0.88 per share, indicating a change of +131.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +3.2% over the last 30 days.

Silicon Motion has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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