Still cheap, but curious how do you end up with the $9 EPS figure?
My forecast numbers produced ~$7.50 per share, but SIMO often crushes EPS forecasts, so I just bumped it up to $9.00 for that reason.
$ 1billion sales
50% gross margin = $500 million gross profit
$160m expenses (how knows in a few years, but they say they're already built to handle higher sales)
500 - 160 = 340m operating profit
11% tax = $40m tax
340 - 40 = 300m net profit
300m/35m shares = $8.50 EPS
You could bump that up to $10.00 for the aforementioned tendency to beat EPS forecasts.
SIMO's tax rate is often below 15%.
SIMO's gross margins should rise a bit above 50% since the growth is driven by their higher margin segment (controller semiconductors) and the collapse / abandonment of the lowest margin segment (Shannon).
And eventually there may be a premium for acquisition as SIMO is now a rapidly growing, highly profitable, high cash producing smallish semiconductor stock - they type that the $30b market cap boys like to gobble up with a 75% premium.
I wouldn't be surprised at all if MRVL or AVGO bought SIMO tomorrow for $100. After a year or two passes, if the revenues appear as forecast, the purchase price is just going to rise. MRVL has about a 40x PE, so SIMO at $100 would be accretive to MRVL's EPS immediately, and MRVL makes enterprise SSD controllers. Same business, same customers. |
