While macroeconomic challenges have impacted the semiconductor industry, its long-term prospects remain optimistic. Amid this backdrop, it could be wise to keep an eye on fundamentally strong tech stocks Cirrus Logic, Inc. (CRUS), Amkor Technology, Inc. (AMKR) and inTest Corporation (INTT).
Before delving deeper into their fundamentals, let’s discuss what’s happening in the chip industry.
Semiconductors play an important role in technical breakthroughs, increasing smart device use, and adopting emerging technologies like artificial intelligence, IoT, and 5G connectivity, which rely significantly on advanced semiconductors.
The Semiconductor Industry Association (SIA) reported that global semiconductor sales grew 1.9% in September 2023 compared to August 2023. Worldwide semiconductor sales totalled $134.70 billion in the third quarter of 2023, a 6.3% rise over the second quarter of 2023.
According to the most recent InsightAce Analytic analysis, the worldwide chiplet market is anticipated to reach $633.38 billion by 2031. The industry is also being driven by the increasing usage of artificial intelligence and cloud computing, both of which necessitate the use of high-performance computing chips.
The global semiconductor market is expected to reach $1.30 trillion by 2032, with a CAGR of 8%. Investors’ interest in chip stocks is evident from the VanEck Vectors Semiconductor ETF’s (SMH) 10.1% returns over the past six months.
Considering these conducive trends, let’s look at the fundamentals of the three Semiconductor & Wireless Chip stocks, starting with number 3.
Stock #3: Cirrus Logic, Inc. (CRUS)
CRUS is a fabless semiconductor company that pioneers advanced low-power, high-precision mixed-signal processing solutions. It provides a diverse range of offerings, including audio products, intelligent codecs, DSP-equipped codecs, amplified boosters, standalone DSPs, and the SoundClear technology.
CRUS’ trailing-12-month ROTA of 6.69% is significantly higher than the 0.15% industry average. Its trailing-12-month ROTC of 10.20% is 292.5% higher than the 2.60% industry average.
In the fiscal second quarter that ended September 23, 2023, CRUS’ revenue stood at $481.06 million, while its gross margin came at 51.3%. Its non-GAAP net income and earnings per share amounted to $101.56 million and $1.80, respectively.
In addition, as of September 23, 2023, the company’s current assets stood at $1.10 billion, compared to $1.02 billion as of March 25, 2023.
Street expects CRUS’ revenue to increase 8.8% year-over-year to $1.83 billion for the year ending March 2025. Its EPS is expected to grow 19.4% year-over-year to $6.21 for the same period. It surpassed EPS estimates in all four trailing quarters. Over the past month the stock has gained 15.6% to close the last trading session at $76.67.
CRUS’ POWR Ratings reflect this optimistic outlook. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CRUS also has a B grade for Value, and Momentum. It is ranked #23 out of 92 stocks in the Semiconductor & Wireless Chip industry. Click here for the additional POWR Ratings for Growth, Stability, Sentiment and Quality for CRUS.
Stock #2: Amkor Technology, Inc. (AMKR)
AMKR is a leading semiconductor packaging and test services provider, including several services, such as design, testing, and packaging for semiconductor devices. Its product line includes a variety of packages used in networking, computing, storage, mobile consumer electronics, and other fields.
AMKR’s trailing-12-month ROCE of 11.09% is significantly higher than the 0.99% industry average. Its trailing-12-month ROTA of 6.04% is significantly higher than the 0.15% industry average.
For the fiscal third quarter ended September 30, 2023, AMKR achieved a gross profit of $282.75 million and an operating income of $166.60 million. Its net income for the quarter amounted to $133.45 million and the company reported EPS of $0.54. Additionally, the company’s EBITDA reached $333 million.
Additionally, for the nine months ended September 30, AMKR’s net cash flow provided by operating activities increased 27.6% year-over-year to $696.19 million.
Analysts expect AMKR’s revenue to increase 7% year-over-year to 6.89 billion for the year ending December 2024. Its EPS is expected to grow 46% year-over-year to $2.03 for the same period. It has surpassed EPS estimates in three of four trailing quarters. Shares of AMKR has gained 36.5% over the past month to close the last trading session at $28.36.
AMKR has an A grade for Momentum and a B for Value and Sentiment. It is ranked #22 in the same industry. Beyond what is stated above, we’ve also rated AMKR for Growth, Stability and Quality. Get all AMKR ratings here.
Stock #1: inTest Corporation (INTT)
INTT is a global provider of testing and process solutions across various industries, including automotive, defence/aerospace, industrial, life sciences, security, and semiconductor manufacturing. They offer innovative solutions for both the front-end and back-end of semiconductor manufacturing.
INTT’s trailing-12-month ROCE of 15.25% is significantly higher than the 0.99% industry average. Its trailing-12-month ROTA of 8.78% is significantly higher than the 0.15% industry average.
For the fiscal third quarter, which ended on September 30, 2023, INTT’s revenue increased marginally year-over-year to $32.66 million, while its net earnings came in at $2.97 million, up 17.5%. The company’s adjusted EPS for the same period came in at $0.28. Also, its adjusted EBITDA increased 2.9% year-over-year to $4.58 million.
The consensus revenue estimate of $126.29 million for the year ending December 2023 represents a 8.1% increase year-over-year. Its EPS is expected to come in at $0.99 for the same period. It surpassed EPS estimates in all four trailing quarters. The stock has gained 26.3% year-to date to close the last trading session at $13.01.
INTT’s is ranked #20 in the same industry. It has an A grade for Value and Momentum. To see additional INTT’s ratings for Growth, Stability, Sentiment and Quality, click here.
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AMKR shares were trading at $28.36 per share on Thursday morning, down $0.00 (0.00%). Year-to-date, AMKR has gained 19.28%, versus a 20.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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