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Technology Stocks : Silicon Motion Inc. (SIMO) -- Ignore unavailable to you. Want to Upgrade?

To: Anonymous895 who wrote (2772)	7/10/2024 9:32:42 AM
From: Elroy	Read Replies (2) \| Respond to of 2969

I don't really know the proper PE for SIMO, but until they can establish success in high end enterprise flash controllers, I would say 12x to 14x seems about the right PE. It's currently a consumer product focused semiconductor stock, in a price sensitive market, which is ex-growth (PCs and cell phones). And it competes directly with it's main customers (NAND makers). It's about as awful a space in tech as one could imagine. Maybe 10x PE is proper? If they succeed in their "new business" initiatives (enterprise flash controllers, auto memory modules), the PE should rise as the new initiatives become a larger share of sales. But even then it's hard to argue SIMO deserves a 15x PE. And I doubt the new areas become $300m in annual sales any time soon. When they do, that's 25% of SIMO's annual sales. Not much as a percentage. I don't understand the current valuation at all.

To: Anonymous895 who wrote (2772)	7/10/2024 10:47:27 AM
From: Kirk ©	Respond to of 2969

You can't answer that without knowing the growth rate, ROC, dividend, dividend history, moat, etc. If a company has a large enough moat, then it should run negative profits as it borrows like mad to expand to take advantage of that moat before someone crosses it. After Enron and Worldcon scams, Barnie Frank and others in Congress added maybe $5M in accounting costs (20 yrs ago) to public companies to better report their risks... so the ones in the high growth, negative profits now stay private much longer so the big rewards are not really available to "the little guys" as the VCs get most of the gains.