Before the Call: Maxim to the Max

As we guide the good ship Equity Market into the earnings squall once again, we are preparing ourselves for the volatility that comes with this always exciting time. In the case of Maxim Integrated Products (NASDAQ:MXIM), investors will likely have to continue working with limited information.

The integrated circuits maker was one of the many companies caught up in the stock-option backdating scandal, and it is still working on putting together restatements going back as far as 2000. For the December quarter, management just gave us its top-line results. That hasn't stopped Fools from watching the stock, though, so to take a closer look, we can turn to Motley Fool CAPS. CAPS is a community of more than 26,000 investors sharing their thoughts on more than 4,000 stocks, including Maxim.

Up or down?
In CAPS, 167 investors have weighed in on Maxim, and the verdict is a rousing so-so.

Out of a possible five stars, Maxim has gotten itself a middling three. Overall, 93% of all ratings have been in favor of Maxim. When it comes to the CAPS All-Stars -- those investors in the top 20% of all CAPS players -- Maxim was given the nod 94% of the time. While these numbers are good, they're not quite enough to put Maxim in the upper echelon of CAPS stocks.

Among comparable chip stocks, Maxim finds itself in the middle of the pack in CAPS.

Wall Street vs. Main Street
When we turn to the Wall Street types, we see a lot of agreement with the three-star CAPS rating, as 10 of the analysts tracked in CAPS say to hold Maxim shares. For those analysts that decided to stick their necks out there, though, it's a unanimous 15-to-0 in favor of Maxim.

The optimism hasn't matched performance over the past year -- the stock is down nearly 20%. Since hitting a 52-week low last August, Maxim had been making a jumpy, but steady, path upwards. In the last month or so, some of that lift has leaked back out.

Losing steam
Maxim hasn't always been this middling on CAPS. Except for a brief dip to three stars at the end of 2006, Maxim has been a solid four-star stock before now. So why the slide? To try and answer that, let's take a look at what some of the CAPS players are saying about the stock.

Bull pitch
CAPS All-Star weiwentg shares:

Maxim is a stock with a wide economic moat, a lot of upside, and ... a lot less risk than other semiconductor stocks. It sells analog circuits. Because analog circuits lack the sophisticated design tools [of their] digital peers ..., and because US colleges aren't training many analog circuit engineers (presumably the field isn't sexy enough), there aren't a lot of analog engineers. Maxim has managed to attract and keep a cadre of the brightest. Analog chips also have a longer life cycle. Those two factors contribute to a moat for Maxim (and Linear Technology, which I also picked).

Maxim has grown at about 25% per year over the past decade. Growth should moderate but remain high. The firm is in excellent financial health, and is very profitable -- its return on assets (ROA) has been greater than 14% over the last five years, and its net margins over the same period have been 27%. The former is twice the industry average ROA, the latter is about 4% higher than the rest of the industry.

Bear pitch
(The sound of crickets is deafening.)

Though 12 players have given Maxim the thumbs-down, none have pitched their recommendation well enough to get recommended by other CAPS players. However, there is obviously some hesitancy about the backdating and what the restated results might reveal.

Who said that?
To learn the identities of the wise Fools who penned these words, and explore the wealth of additional financial data we've put together on the company, just click here.

Think you can pitch your favorite stock -- or ditch your least favorite one -- in 27 seconds or less? That's just what we're doing over at Motley Fool CAPS! Come check out our new 27-second stock pitches.

When it comes to short-term trading, Fool contributor Matt Koppenheffer is less Jesse Livermore and more Uncle Jesse. He does not own shares of any of the companies mentioned. The Fool's disclosure policy never comes up short.