Shares of technology company, PMC-Sierra PMCS, hit a new 52-week high of $9.58 on Feb 27, eventually closing at $9.50. The company returned 28.97% in one year and 3.77% year-to-date. Average volume of shares traded over the last three months was roughly 1,372K.
What's Driving PMC-Sierra?
PMC-Sierra designs, develops, markets and supports semiconductor solutions. The company’s portfolio of semiconductor devices is used in various applications within communications network infrastructure equipment. With more data and video moving onto the global network, PMC continues to develop innovative technologies for global service providers, which in turn drives growth.
The company’s product introductions and design wins, LTE build-out in China, cloud and data center build-outs and increasing storage demand remain the solid growth catalysts, going forward.
The price appreciation may also be attributed to PMC-Sierra’s impressive record of returning cash to shareholders through dividends and share buybacks. Most recently, the company authorized a new share repurchase program for up to $75 million, increasing the total repurchase authorization to $102 million.
We, thus, remain positive on the company’s strong cash position and strong long-term growth outlook. Moreover, continuous share buybacks will inspire investors’ loyalty through high returns.
Moreover, the company gained momentum from strong fundamentals and better-than-expected fourth-quarter results released on Jan 29. Since then, the stock has moved up 4%.
PMC-Sierra’s top line increased 1% sequentially and 7.9% from the year-ago period to $136.9 million. The increase was driven by broad-based strength in the company’s storage products and optical products, partially offset by weak demand for mobile products. However, non-GAAP earnings of 9 cents came in line with the Zacks Consensus Estimate.
Moreover, the Zacks Consensus Estimate for fiscal 2015 earnings represents a 23.3% jump from the prior-year tally. Additionally, the company has delivered an average earnings surprise of nearly 24.64% over the trailing four quarters. PMC-Sierra’s strong revenue growth, solid financial conditions, increasing market share in server/storage markets and strong long-term growth potential position it favorably.
PMC-Sierra currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the technology space include Nitto Denko Corp. NDEKY DSP Group Inc. DSPG and Emulex Corp. ELX, all sporting a Zacks Rank #1 (Strong Buy).
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