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Cirrus Logic (CRUS) is a Solid Bet for Investors: Here's Why

Shares of Cirrus Logic, Inc. CRUS have gained 16.3% compared with the industry’s growth of 13.9% in the past three months. Solid demand for audio and haptic solutions is a major tailwind. In the past few years, it has unveiled a plethora of new products related to mid-tier smartphones and the emerging digital headset market, including amplifiers and SoundClear embedded software.

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Earnings estimates for the current and next fiscal have increased 7.6% and 7.5%, respectively, in the past 90 days. With impressive growth potential and robust fundamentals, this Zacks Rank #2 (Buy) fabless semiconductor company is an attractive investment option at the moment. CRUS pulled off a trailing four-quarter earnings surprise of 14.9%, on average.

Key Drivers

Headquartered in Austin, TX, Cirrus Logic is a leading provider of low-power, high-precision mixed-signal processing solutions. The company develops, manufactures and markets analog, mixed-signal, and audio DSP integrated circuits (ICs). Markedly, in fiscal 2021, Cirrus Logic generated revenues of $1.37 billion.

The company has two reportable segments – Audio and High-Performance Mixed-Signal. Audio product lines include smart codecs, analog-to-digital converters, digital-to-analog converters, boosted amplifiers and standalone digital signal processors. High-Performance Mixed-Signal products include haptic driver and sensing solutions, camera controllers and power-related components.

Cirrus Logic sells products through both direct and indirect sales channels. The company’s customers include the worlds’ leading electronic manufacturers. It is worth mentioning that Apple Inc. is the company’s largest customer representing nearly 83% of its fiscal 2021 sales. Some of its primary competitors are Realtek Semiconductor, Skyworks Solutions, ST Microelectronics, Synaptics and Texas Instruments.

This cash-rich company is focused on tapping the growth opportunities in digital headsets, MEMS microphones, voice biometrics and closed loop controllers in the long haul. A sustained focus on expanding product portfolio will help Cirrus Logic gain new customers, thereby driving revenues. The company anticipates a steady revenue uptick from Android customers, backed by content gains on various OEMs.

The entity frees up resources for research and development activity that would otherwise have been locked up in capital assets. This approach permits the company to focus more on designing, developing and marketing, reducing operational and financial risks. Also, strong operating cash flows have helped it enhance shareholders’ wealth through share repurchases. In fiscal 2021, the company had generated operating cash flows of $349 million.

Other Stocks to Consider

Broadcom Inc. AVGO is another top-ranked stock in the industry, sporting a Zacks Rank #1 (Strong Buy). The consensus estimate for current-year earnings has been revised 6.5% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Broadcom delivered a trailing four-quarter earnings surprise of 1.4%, on average. The stock has returned 29.8% in the past year. AVGO has a long-term earnings growth expectation of 14.5%.

Impinj, Inc. PI carries a Zacks Rank #2. The consensus estimate for current-year earnings has been revised 60% upward over the past 60 days.

Impinj delivered a trailing four-quarter earnings surprise of 128.3%, on average. The stock has rallied 60.6% in the past year. PI has a long-term earnings growth expectation of 20%.

Advanced Micro Devices, Inc. AMD also has a Zacks Rank #2, at present. The Zacks Consensus Estimate for its current-year earnings has been revised 0.4% upward in the past 60 days.

Advanced Micro Devices delivered a trailing four-quarter earnings surprise of 14%, on average. The stock has gained 53% in the past year. AMD has a long-term earnings growth expectation of 46.2%.


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Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
 
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