Why Silicon Motion Technology's Shares Dropped

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What: Shares of Silicon Motion Technology (NASDAQ: SIMO  ) fell as much as 14% today after the company released earnings.

So what: Net sales fell 19% from the fourth quarter to $57.4 million, coming in just ahead of estimates. The real downside was on the bottom line, where earnings per share dropped more than 50%, to $0.17, $0.05 short of estimates. 

Now what: The decline in revenue was driven by mobile storage and mobile communications products, two cores of the company. The stock is trading at just five times forward earnings estimates, but the declining revenue and earnings has a value trap written all over it. I'm staying away from this stock today, and need to see operational improvement to be a buyer.

Interested in more info on Silicon Motion Technology? Add it to your watchlist by clicking here.

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Related Tickers

9/27/2016 9:37 AM
SIMO $49.05 Down -0.39 -0.79%
Silicon Motion Tec… CAPS Rating: ***