What happened
Shares of MaxLinear (MXL 2.82%) jumped as much as 20% on Thursday after the company reported first-quarter 2022 earnings. Shares are up 10.5% as of 12:37 p.m. ET.
So what
After the market close on April 27, MaxLinear put out its Q1 2022 earnings report. Net revenue was $264 million, up 26% year over year, and non-GAAP adjusted earnings per share (EPS) was $1, up from $0.55 a year ago. Both numbers slightly beat the consensus analyst estimates heading into the report, which is why investors decided to bid up the stock today.
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MaxLinear is a leading provider of different integrated circuits that go into electronic and internet-connected devices. Right now, the highlight of its business is Wi-Fi components, which management thinks can double in 2022. In 2023, MaxLinear expects Wi-Fi revenue to reach over $200 million. Over the longer term, the next generation Wi-Fi 7 standards should open up even more growth opportunities for MaxLinear within this industry.
Looking to the next quarter, MaxLinear expects revenue of $275 million to $285 million in the period and non-GAAP gross margins of 61% to 63%.
Now what
Over the last 12 months, MaxLinear has generated $103.5 million in operating income. Compared to a market cap of $3.75 billion, that gives the stock a price-to-operating income (P/OI) ratio of 36. This is not cheap, even though the stock is down 35% year to date (YTD).
MaxLinear can be a nice small-cap electronics company for your portfolio. But in order to perform well given its current P/OI ratio, revenue and profits need to continue growing at a 20%+ annual rate.
