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Bull Of The Day: Diodes Inc (DIOD)

Diodes Inc (DIOD) is a Zacks  Rank #1 (Strong Buy) and this chip maker recently reported and posted guidance that was above the Wall Street estimate for sales.  The company hasn’t missed on a quarterly report since 2017.   Let’s take a deeper look at this stock in this Bull of the Day article.

Description

Diodes Incorporated is a leading manufacturer and supplier of high-quality discrete and analog semiconductor products, primarily to the communications, computing, industrial, consumer electronics and automotive markets. The Company's corporate sales, marketing, engineering and logistics headquarters is located in Southern California.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

For DIOD, I see a great history of beating the Zacks Consensus Estimate.  There are four beats over the last four quarters.  As mentioned above, the company is actually has an 18 quarter streak of beating the Zacks Consensus Estimate.

The average positive earnings surprise over the last fours quarters works out to be 10%, which isn’t much but consistency is the name of the game for DIOD. 

Earnings Estimates Revisions

The Zacks Rank tells us which stocks are seeing earnings estimates move higher.  For DIOD, I see estimates moving higher.

Over the last 60 days, I see a few increases.

This quarter has moved from $1.13 to $1.38.

Next quarter has moved from $0.95 to $1.17.

The full-year number has increased from $4.24 to $4.76 over the last 60 days.

Next year is at $5.52 and that is up from $4.74 over the same time horizon.

Positive movement in earnings estimates like that is why this stock is a Zacks Rank #1 (Strong Buy).

Valuation

The valuation for DIOD is very reasonable.  I see an 19x forward earnings multiple and sales growth in the most recent quarter coming in just over 52%.  The price to book multiple of 3.6x and that is well below the industry average of 13x.  Price to sales comes in at 2.7x and again this is well below the industry average of 12x. 

Chart

Diodes Incorporated Price, Consensus and EPS Surprise

Diodes Incorporated price-consensus-eps-surprise-chart | Diodes Incorporated Quote


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