Silicon Laboratories Earnings Preview

Watch Silicon Laboratories' (Nasdaq: SLAB  ) earnings report to see if it can beat analyst expectations for the fifth consecutive quarter. The company will unveil its latest earnings Wednesday. Silicon Laboratories designs and develops proprietary, analog-intensive, and mixed-signal integrated circuits.

What analysts say:

  • Buy, sell, or hold?: The majority of analysts back Silicon Laboratories as a buy. But with 54.5% of analysts rating it a buy, Silicon Laboratories is still below the mean analyst rating of its nearest 10 competitors, which average 61.1% buys. Analysts don't like Silicon Laboratories as much as competitor Semtech overall. Five out of seven analysts rate Semtech a buy compared with six of 11 for Silicon Laboratories. While analysts still rate the stock a hold, they are a little more optimistic about it compared with three months ago.
  • Revenue Forecasts: On average, analysts predict $117.3 million in revenue this quarter. That would represent a decline of 2.4% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.21 per share. Estimates range from $0.17 to $0.24.

What our community says:
CAPS All-Stars are solidly backing the stock with 96.9% granting it an "outperform" rating. The community at large backs the All-Stars with 92.5% awarding it a rating of "outperform." Fools are keen on Silicon Laboratories, though the message boards have been quiet lately with only 93 posts in the past 30 days. Even with a robust four out of five stars, Silicon Laboratories' CAPS rating falls a little short of the community's upbeat outlook.

Management:
Revenue has fallen for the past three quarters. The company's gross margin shrank by 7.1 percentage points in the last quarter. Revenue fell 6.2% while cost of sales rose 14.4% to $50 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

60.4%

60.3%

63.5%

65.5%

Operating Margin

12.7%

4.1%

9.8%

16.1%

Net Margin

10.6%

(1.6%)

11.5%

15.2%

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