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MaxLinear (MXL) Hits Fresh High: Is There Still Room to Run?

Have you been paying attention to shares of MaxLinear (MXL)? Shares have been on the move with the stock up 23.8% over the past month. The stock hit a new 52-week high of $63.99 in the previous session. MaxLinear has gained 59.7% since the start of the year compared to the 25.2% move for the Zacks Computer and Technology sector and the 22.4% return for the Zacks Semiconductor - Analog and Mixed industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 27, 2021, MaxLinear reported EPS of $0.75 versus consensus estimate of $0.68 while it beat the consensus revenue estimate by 1%.

For the current fiscal year, MaxLinear is expected to post earnings of $2.44 per share on $877.95 million in revenues. This represents a 177.27% change in EPS on an 83.44% change in revenues. For the next fiscal year, the company is expected to earn $2.78 per share on $953.9 million in revenues. This represents a year-over-year change of 14.02% and 8.65%, respectively.

Valuation Metrics

MaxLinear may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

MaxLinear has a Value Score of D. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 25X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 56.4X versus its peer group's average of 31.1X. Additionally, the stock has a PEG ratio of 1.25. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, MaxLinear currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if MaxLinear passes the test. Thus, it seems as though MaxLinear shares could have a bit more room to run in the near term.

How Does MaxLinear Stack Up to the Competition?

Shares of MaxLinear have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Magnachip Semiconductor (MX), Synaptics (SYNA), and Broadcom (AVGO), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

The Zacks Industry Rank is in the top 15% of all the industries we have in our universe, so it looks like there are some nice tailwinds for MaxLinear, even beyond its own solid fundamental situation.

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