Silicon Motion Technology Corp. – Momentum (SIMO)

ZacksSilicon Motion Technology Corp. (SIMO) has posted huge gains in 2011, up more than 300% after recently crossing the $20 mark. With estimates on the rise and a bullish growth projection, this Zacks #1 Rank stock is a small capper out of technology with plenty of momentum.

Company Description

Silicon Motion Technology Corp is a fabless semiconductor company that designs and develops a portfolio of data processing and storage devices used primarily in consumer electronics. Some of these products include flash drives, handsets, gaming consoles, PC’s and laptops. The company has a market cap of $546 million and is based out of Jhubie City, Taiwan.

SIMO has seen big gains in 2011 selling components into high-growth markets like mobile storage and communication devices. That lifted the company to strong Q3 results from November 1 that came in well ahead of expectations.

Third-Quarter Results

Revenue for the period was up 25% from last year to $62 million. Earnings also come in strong at 56 cents, 250% ahead of the Zacks Consensus Estimate.

The company’s largest segment, mobile storage (Flash/NAND drives) saw sales increase 15% to $39 million. But its biggest gain came from mobile communication devices (handsets), with sales up 58% from last year to $20 million.

Gross margin was also on the upswing, climbing to 49.4% from 46.9%.

Financial Profile

Silicon’s financial profile also looks solid, with cash and short-term investments up 21% from last year to $70 million against no long-term debt.

Estimates

We saw some bullish movement in estimates off the good quarter, with the current year climbing 41% to $1.00. The next-year estimate is pegged at $1.15, a solid 14% growth projection.

Valuation

With a PEG ratio of 1.36, SIMO trades at a premium to the benchmark of 1 for value.

2-Year Chart

On the chart, shares have been strong all year, up more than 300% after recently topping off above $20. Look for support from the longer-term trend on any weakness. Take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Whisper Trader Service.

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