Why Integrated Device Technology, Inc. Shares Soared

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 Integrated Device Technology, (NASDAQ: IDTI  ) jumped 13% Tuesday, even after the company posted mixed quarterly results and soft forward revenue guidance.

So what: Quarterly revenue rose to $124.6 million, which translated to adjusted net income of $0.17 per diluted share. By contrast, analysts were looking for adjusted earnings of just $0.12 per share on higher sales of $127.36 million.

CEO Greg Waters explained while the revenue was inline with the company's guidance provided last quarter, a favorable product mix led to higher-than-expected adjusted gross margin at 62.4%.

Going forward, the company expects fiscal fourth quarter 2014 revenue to be in the range of $114 to $120 million. That's well below expectations for sales of $122.3 million, and thanks largely to the divestiture of its PC audio business.

Now what: At the same time, however, Waters insisted the transition of their business model is progressing faster than they had hoped, and by the end of the quarter "the impact of declining or discontinued product lines will be washed out of the income statement and the real growth drivers within IDT will be clearer and easier to model."

Considering the stock trading at a reasonable 18 times next year's estimated earnings -- or just 13 times when you back out the company's $438 million cash pile -- it's hard to blame investors for bidding up the stock today. If IDT can indeed resume profitable growth from here, the stock could prove a bargain for patient long-term investors.

IDT's not the only great long-term stock
It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report "
3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2823761, ~/Articles/ArticleHandler.aspx, 9/1/2015 6:15:38 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Steve Symington

Technology and consumer goods specialist for the Fool. Steve looks for responsible businesses which positively shape our lives. Then, he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.

Today's Market

updated 8 hours ago Sponsored by:
DOW 16,528.03 -114.98 -0.69%
S&P 500 1,972.18 -16.69 -0.84%
NASD 4,776.51 -51.82 -1.07%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/31/2015 3:59 PM
IDTI $18.99 Down -0.10 -0.52%
Integrated Device… CAPS Rating: **