Silicon Laboratories Q3 Earnings: Can NasdaqGS:SLAB Hit Its $0.73 EPS Target?

in EARNINGS/INVESTING IDEAS by

Silicon Laboratories Inc. (NasdaqGS:SLAB) is scheduled to report Q3 earnings results on October 28, 2020.

The company is expected to report earnings of $0.73/share on revenue of $213 million. The consensus earnings per share (EPS) of $0.73/share is based on a poll of 12 analysts and represents a decline in eps of −23.6% over the same quarter last year, when the company reported earnings of $0.96/share.

The revenue forecast of $213 million based on a poll of 10 analysts implies a year-over-year (YoY) decline in revenue of −4.6%. Last year the company reported $223.3 million in revenue for the quarter.

Expected to report EPS contraction of −23.6% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $213.00 $223.29 −4.6%
EPS $0.73 $0.96 −23.6%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Silicon Laboratories Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.57 $0.74 30.4% Beat
Q1, 2020 $0.51 $0.69 36.0% Beat
Q4, 2019 $0.89 $0.84 −5.8% Missed
Q3, 2019 $0.84 $0.96 14.1% Beat
Q2, 2019 $0.74 $0.83 11.9% Beat
Q1, 2019 $0.47 $0.59 25.4% Beat
Q4, 2018 $0.94 $0.91 −3.1% Missed
Q3, 2018 $0.98 $1.01 3.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending July 4, 2020, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $102.62 $102.74 0.1% Increase
April 29, 2020 $95.35 $97.22 2.0% Increase
January 29, 2020 $118.50 $104.50 −11.8% Decline
October 23, 2019 $106.91 $109.42 2.3% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.87, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.87 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Silicon Laboratories Inc. is currently trading at $101.94/share, down −3.0% for the day. The company is trading at approximately 82.9% of its 52-week high of $122.90/share. The company’s stock price is down −0.8% since the last earnings report and down −2.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 52.27 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:SLAB Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 147.26 and a forward P/E multiple of 36.45.

Silicon Laboratories Inc.’s current share price also implies a price-to-book (P/B) multiple of 3.86. The following table summarizes some other key fundamental ratios:

Data as of October 26, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date July 4, 2020
Stock Price (Current) $101.94
P/E Ratio 147.3x
P/E Ratio (Fwd) 36.5x
PEG Ratio −17.9
Total Debt / Total Capital 11.1%
Levered Free Cash Flow $178.4 million
EV / EBITDA 40.2x

Finbox

Silicon Laboratories Inc. is a mid-cap stock with a market capitalization of $4.465 billion and a total enterprise value of $4.313 billion. The company operates in the Information Technology sector and the Semiconductors & Semiconductor Equipment industry.

Silicon Laboratories Inc., a fabless semiconductor company, provides mixed-signal integrated circuits (ICs) in the United States, China, and internationally. The company offers Internet of Things products, including 8-bit mixed-signal and ultra-low-power 32-bit microcontrollers (MCU); wireless MCU connectivity solutions; single and multi-protocol system-on-chip (SoC) devices and modules; wireless protocols, MCUs, and SoCs; in-house protocol stacks; Micrium, a real-time operating system that helps simplify software development for IoT developers; and sensor products comprising optical, relative humidity/temperature, and hall effect magnetic sensors. It also provides infrastructure products, such as timing devices; multi-channel isolators, isolated drivers, isolated power converters, and mixed-signal devices; broadcast products, which include single-chip hybrid TV tuners and digital video demodulators, as well as AM/FM, HD radio, and DAB/DAB+ receivers; and hybrid software defined radio tuners, data receivers, and digital radio coprocessors. In addition, the company provides access products comprising ProSLIC, a subscriber line interface circuits for voice over IP; ISOmodem embedded modems; and Power over Ethernet power source equipment and powered device ICs. It primarily markets its products to Internet of Things, Internet infrastructure, industrial automation, consumer, and automotive markets through direct sales force, as well as through a network of independent sales representatives and distributors. Silicon Laboratories Inc. was founded in 1996 and is headquartered in Austin, Texas.

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