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Cirrus Logic Inc. (CRUS) Gains Big on Impressive Third Quarter Earnings Growth Estimate

By: , dated January 11th, 2012
Cirrus Logic Inc. (CRUS) Gains Big on Impressive Third Quarter Earnings Growth Estimate
Shares of Cirrus Logic Inc. (CRUS: Charts, News) rose in NASDAQ trading on Tuesday as traders and investors digested a very favorable preliminary Q3 earnings estimate of $122 million, showing year on year earnings growth of 28%. Although that unaudited net revenue figure might be revised in future, it reflects a substantial improvement over the integrated circuit company’s previous estimate of only $102 million to $108 million.

Cirrus President and CEO Jason Rhode enthusiastically stated that, “Q3 was a great quarter for Cirrus Logic, and we are particularly pleased that the last few weeks of the quarter were much stronger than we had anticipated, indicating that demand remains robust following the holiday season.”

In response to the good anticipated earnings news, shares of Cirrus Logic traded sharply higher in active trading to close at $19.64 per share, up +2.67 or 15.73% on the day. Technical factors also supported the stock as it showed sudden strength after a protracted consolidation period.

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Austin, Texas based Cirrus Logic Inc. holds a significant patent portfolio based on its development of both analog and mixed signal integrated circuits that are used primarily in audio and energy applications. Statistically, the company has shown a 52 week range of 12.52 – 25.48 with a price to earnings ratio of 6.80 and earnings per share of 2.494.

The company announced its preliminary results for operations for its third quarter that ended on December 31st, 2011 on January 9th, 2012. In the announcement, Cirrus reported that it had increased its estimated net revenue to $122 million. Cirrus Logic’s final results for Q3 Fiscal 2012 are now scheduled for release on January 26th, along with a live question and answer session for investors.

According to the company, this improved earnings estimate was based on anticipated revenues from the company’s audio related products of $105 million and from its energy related products of $17 million. In addition, the company estimates its gross margin at 54 percent. Furthermore, Cirrus Logic estimates that its Q4 results, due out in March, should come out in the region of $105 million. If so, that would have the company showing a 15 percent gain year on year in its fourth quarter.

Nevertheless, that good earnings news was tempered somewhat by the announcement that the company anticipated having spent $600 thousand more on research and development (R&D) and selling, general and administrative (SG & A) expenses than the high end of its previous estimate.

From a technical perspective, the recent positive fundamental news has caused the Cirrus Logic’s stock price to break out of a medium term triangular pattern to the upside, with a measuring objective that can be computed in the 21 region. The stock had previously traded in an increasingly narrow consolidation within this pattern since it entered the triangle last October.

Given both a positive fundamental and technical picture for the stock, in addition to the company’s strong product development efforts, Cirrus Logic Inc. could again favorably impress the stock market at its next earnings release in March, especially if it takes meaningful steps to keep costs under control.

Other News About CRUS
Cirrus Logic Announces Preliminary Q3 Revenue Grows 28% Year Over Year to $122 Million
The integrated circuit company’s press release about its revised earnings estimate.
Cirrus Logic Named One of 2011′s Best Companies to Work for in America
Innovative technology company earns accolades for its high quality work environment.
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Jay Hawk Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

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