CRUS - Embedded Expectations Analysis - 2021 03 05
Cirrus Logic, Inc. (CRUS:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 15.7x Uniform P/E, implying bearish expectations for the firm. Although management's concerns about growth, product ramp-ups, and their new closed-loop controller suggest the potential for near-term headwinds, equity outperformance remains warrantedSpecifically, management may lack confidence in their ability to drive growth beyond the audio domain and ramp up their power conversion and control devices by the end of 2021. Moreover, they may be exaggerating their extensive mixed-signal engineering expertise, and they may be concerned about the performance of their new closed-loop controller and supply chain headwinds. Finally, management may lack confidence in their ability to realize laptop opportunities
Although management's concerns about growth, product ramp-ups, and their new closed-loop controller suggest the potential for near-term headwinds, market expectations are too bearish given the firm's long-term competitive advantages, and equity outperformance is likely for CRUS
Cirrus Logic focuses on low-power integrated circuits (ICs) for audio, voice and other signal-processing applications. The company's product lines include: Portable Products, including codecs, which are chips that integrate analog-to-digital converters (ADCs) and digital-to-analog converters (DACs) into a single IC, smart codecs, which are codecs with digital signal processing integrated, amplifiers, micro-electromechanical systems microphones, haptic drivers, standalone digital signal processors, and its SoundClear? technology, which includes a portfolio of tools, software and algorithms; and Non-Portable and Other Products, which include ICs, codecs, ADCs, DACs, digital interfaces and amplifiers.
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