CIRRUS LOGIC Capital Returns Have Reached a Stalemate
December 9, 2023
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Cirrus Logic ($NASDAQ:CRUS) is a diversified semiconductor company headquartered in Austin, Texas. It specializes in designing and manufacturing analog and mixed-signal integrated circuits for audio, voice and industrial applications. Unfortunately, the company’s Return on Capital (ROC) has been stuck in a stalemate recently. ROC is a key measure of financial performance and it represents the amount of profits derived from each dollar of invested capital in a business. For Cirrus Logic, the ROC was steadily increasing for many years, but it has now leveled off and is no longer increasing.
This has caused some concern among investors and analysts due to its potential implications for the company’s future growth and profitability. It is still too soon to tell what this means for Cirrus Logic in the long run, but it is certainly something that investors and analysts will be keeping an eye on. As a leader in the consumer electronics industry, Cirrus Logic needs to find ways to continue to innovate and stay ahead of the competition in order to ensure its future success. Without increasing returns on capital, this will be a difficult task.
Market Price
On Friday, CIRRUS LOGIC, a leading provider of audio and precision analog components, saw its stock price reach a stalemate. CIRRUS LOGIC opened at $78.5 and closed at the same price. Though the stock had experienced modest rises earlier this year, the stock has been marking its territory around this price point since mid-August. Analysts have suggested that the stagnation of CIRRUS LOGIC’s stock can be attributed to the company’s current lack of major developments, leaving the future prospects of CIRRUS LOGIC uncertain. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Cirrus Logic. More…
| Total Revenues | Net Income | Net Margin |
| 1.76k | 140.81 | 11.7% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Cirrus Logic. More…
| Operations | Investing | Financing |
| 166.67 | -40.26 | -203.64 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Cirrus Logic. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 2.1k | 396.1 | 31.5 |
Key Ratios Snapshot
Some of the financial key ratios for Cirrus Logic are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 12.3% | 17.0% | 12.2% |
| FCF Margin | ROE | ROA |
| 7.2% | 8.0% | 6.4% |
Analysis
GoodWhale conducted an analysis of CIRRUS LOGIC‘s wellbeing and found that based on our Star Chart, the company has a high health score of 9/10 with regards to its cash flows and debt. This indicates that it is capable of sustaining future operations even in times of crisis. We classified this company as a ‘rhino’, which is a type of company that has achieved moderate revenue or earnings growth. Investors interested in such a company may be looking for stability rather than rapid growth. CIRRUS LOGIC is strong in asset and profitability but medium in growth and weak in dividend. Thus, investors may be looking for a long-term investment that is not seeking large returns but guaranteed stability and safety. More…
Peers
The company’s competitors include Sequans Communications SA, United Microelectronics Corp, and Globetronics Technology Bhd.
– Sequans Communications SA ($NYSE:SQNS)
Sequans Communications S.A. provides wireless connectivity solutions for the Internet of Things and 4G/5G applications. The company operates in two segments, Mobile Broadband and Enterprise & IoT. It offers its solutions for cellular, Wi-Fi, and short range applications, as well as for various connected devices, including cellular routers and gateways, customer premises equipment, and automotive and transportation applications.
– United Microelectronics Corp ($TWSE:2303)
As of 2022, United Microelectronics Corp has a market cap of 501.15B and a Return on Equity of 18.27%. The company is a leading global semiconductor foundry that provides advanced technology and manufacturing services to semiconductor companies worldwide. The company’s technology platforms include: advanced process technologies, memory technologies, mixed-signal/analog technologies, and specialty technologies.
– Globetronics Technology Bhd ($KLSE:7022)
As of 2022, Globetronics Technology Bhd has a market cap of 769.86M and a Return on Equity of 11.1%. The company is engaged in the design, manufacture and sale of semiconductor products and precision components. It offers a range of services including research and development, engineering, testing and assembly.
Summary
Investing in Cirrus Logic is a risky venture. Historically, the company has seen strong returns on capital, but the stock has been volatile in recent years. Analysts suggest that the company’s current market capitalization is not representative of its potential and that investors should focus on the company’s long term prospects.
However, there is no guarantee of success as the company may be facing increased competition, pricing pressure and other industry specific challenges. Investors should conduct thorough research into the company’s financials and operations before investing.
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