Why the Market Dipped But Silicon Motion (SIMO) Gained Today

In the latest close session, Silicon Motion (SIMO) was up +2.09% at $277.70. The stock exceeded the S&P 500, which registered a loss of 0.48% for the day. Meanwhile, the Dow experienced a drop of 0.77%, and the technology-dominated Nasdaq saw a decrease of 0.64%.

The chip company's shares have seen an increase of 21.44% over the last month, surpassing the Computer and Technology sector's gain of 0.4% and the S&P 500's loss of 0.97%.

The investment community will be closely monitoring the performance of Silicon Motion in its forthcoming earnings report. The company is predicted to post an EPS of $3.3, indicating a 230% growth compared to the equivalent quarter last year. In the meantime, our current consensus estimate forecasts the revenue to be $532.81 million, indicating a 120.17% growth compared to the corresponding quarter of the prior year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $11.16 per share and revenue of $1.89 billion, which would represent changes of +214.37% and +112.86%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Silicon Motion. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Silicon Motion is currently a Zacks Rank #1 (Strong Buy).

In terms of valuation, Silicon Motion is currently trading at a Forward P/E ratio of 24.39. This denotes a premium relative to the industry average Forward P/E of 21.61.

One should further note that SIMO currently holds a PEG ratio of 0.46. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. By the end of yesterday's trading, the Computer - Integrated Systems industry had an average PEG ratio of 0.63.

The Computer - Integrated Systems industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 29, this industry ranks in the top 12% of all industries, numbering over 250.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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