High-performance analog companies such as Linear Technology
Then along comes Intersil
This was a good quarter for Intersil, and I don't say that simply because it beat the numbers from Wall Street's howler monkeys (that's "equity research analysts," for you new readers). Sales were up 38% from last year and 12% from the immediately prior quarter. Gross margins improved, as did operating margins, and operating income rose by more than 200%. Granting that year-over-year numbers can be a little screwy, I'd point out that sequential operating income growth was on the order of 37%.
The story here is pretty basic and very attractive: The company is trying to migrate further into high-performance analog chips. Why? Well, look at the margins for the likes of Analog Devices
I also like the company's capital structure. It has its own fabrication shops to handle proprietary (i.e., high-margin) products, and it can use outsiders such as IBM
This love note comes to a screeching halt at valuation, though. You have to bake in some rather aggressive numbers to get an attractive target price, and that's just not the way I generally go about valuation. I'd rather be cheap and miss a few good stories than get too aggressive and take losses. So while I'm a big fan of Intersil the company, I'll be holding off on Intersil the stock until I see a better price. That said, it wouldn't surprise me a bit to see enthusiastic investors push this one even higher.
For more high-performance Takes:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).