Why Silicon Motion Technology Corp. Shares Soared

Is Silicon Motion's jump meaningful? Or just another movement?

Jan 28, 2014 at 4:43PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Silicon Motion Technology Corp. (NASDAQ:SIMO) jumped 16% Tuesday after the company announced better-than-expected fiscal fourth quarter 2013 results.

So what: Quarterly revenue came in at $52.5 million, which translated to adjusted earnings of $0.30 per diluted share. By contrast, analysts were only looking for earnings of just $0.21 per share on sales of $51.87 million.

For the current quarter, Silicon Motion expects revenue to arrive flat to down 10% sequentially as gross margins remain steady in the 48% to 50% range. That puts Q1 revenue in the range of $47.25 to $52.5 million, or slightly below average expectations of $51.56 million.

For the full year 2014, however, they expect revenue to increase 5% to 15%, or a range of $236.6 million to $259.1 million, the midpoint of which is well ahead of expectations for fiscal 2014 sales of $236.6 million.

Now what: Things seem to be progressing nicely in Silicon Motion's transition away from removable storage controllers, and toward more promising growth markets. And remember, that transition notably took a leap forward last quarter with the introduction of Silicon Motion's new SATA II client SSD controllers and LTE-Advanced receivers.

This time, Silicon Motion CEO Wallace Kou was happy to announce "the testing of our new LTE-Advanced receiver paired with Samsung's new LTE-Advanced baseband is nearing completion for our first flagship win at Samsung's 2014 smartphone lineup."

That's a big win for Silicon Motion shareholders. Assuming all goes as planned, and with shares currently trading at a modest 19.6 times trailing earnings and 16.8 times next year's estimates, I think Silicon Motion stock could still prove a bargain for patient investors over the long-term.

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Steve Symington and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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