2 Reasons to Like PI and 1 to Stay Skeptical
Max Juang /
2025/07/09 12:06 am EDT
Over the last six months, Impinj’s shares have sunk to $117.97, producing a disappointing 17.9% loss - a stark contrast to the S&P 500’s 6.9% gain. This may have investors wondering how to approach the situation.
Given the weaker price action, is now the time to buy PI? Find out in our full research report, it’s free.
Why Does Impinj Spark Debate?Founded by Caltech professor Carver Mead and one of his students Chris Diorio, Impinj (NASDAQ:PI) is a maker of radio-frequency identification (RFID) hardware and software.
Two Things to Like:1. Skyrocketing Revenue Shows Strong MomentumA company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, Impinj’s sales grew at an excellent 16.8% compounded annual growth rate over the last five years. Its growth surpassed the average semiconductor company and shows its offerings resonate with customers. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
2. Increasing Free Cash Flow Margin Juices FinancialsIf you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Impinj’s margin expanded by 23.7 percentage points over the last five years. We have no doubt shareholders would like to continue seeing its cash conversion rise as it gives the company more optionality. Impinj’s free cash flow margin for the trailing 12 months was 12.2%.
 One Reason to be Careful:Operating Losses Sound the AlarmsOperating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
Impinj’s high expenses have contributed to an average operating margin of negative 8.4% over the last two years. Unprofitable semiconductor companies require extra attention because they could get caught swimming naked when the tide goes out.
 Final JudgmentImpinj’s merits more than compensate for its flaws. With the recent decline, the stock trades at 73.1× forward P/E (or $117.97 per share). Is now a good time to initiate a position? See for yourself in our full research report, it’s free.
2 Reasons to Like PI and 1 to Stay Skeptical |
