Please ensure Javascript is enabled for purposes of website accessibility

Why Cirrus Logic Shares Tumbled Today

By Anders Bylund - Updated Apr 30, 2021 at 12:49PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The fourth-quarter earnings report came in below expectations.

What happened

Cirrus Logic (CRUS 0.19%) reported fourth-quarter results on Thursday evening. The report fell short of Wall Street's estimates, sending Cirrus shares sharply lower on Friday. The stock plunged as much as 17.5% lower in the morning session.

So what

The designer of audio controllers and mixed-signal processing chips saw fourth-quarter sales fall 5% year over year to $293.5 million. Adjusted earnings slid from $0.68 to $0.66 per diluted share. Your average analyst had been looking for earnings near $0.71 per share on revenue in the neighborhood of $302.5 million. Cirrus' management also set the midpoint of its first-quarter revenue guidance 8% below the Street's current projections.

Photo of a circuit board where a single chip is on fire.

Image source: Getty Images.

Now what

It's no surprise to see investors jumping ship on this combination of soft results and weak near-term guidance. However, the company's problems start with limited access to chip-making manufacturing lines amid a global shortage of semiconductor manufacturing capacity. Management expects these issues to linger for a while but the chip industry will surely rebuild and recover in the long run. It's kind of a nice problem to have when consumers want more of your smartphone audio and haptic feedback chips than you can produce. In the long haul, I see Cirrus as a buy at a 30% discount to January's all-time highs.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cirrus Logic, Inc. Stock Quote
Cirrus Logic, Inc.
$69.76 (0.19%) $0.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.