Valens Equities Weekly Insight and Inflections for August 24, 2016
Each week the Valens Securities team highlights our most interesting insights from across our tools and our analysis, including individual company industry and macro insights.
Expectations for CRUS to see an ROA’ compression are unwarranted as management and analysts have growing confidence about the firm’s outlook
CRUS is trading at a 12.2x V/E’, which is near historical averages. At these levels, the market is pricing in expectations for a declining ROA’, from 26.1% in 2016 to 14.7% in 2021, accompanied by 5.0% Asset’ growth. Analysts have expectations in line with the market, expecting ROA’ to decline to 18.9% in 2018, accompanied by 21.4% Asset’ growth. However, Valens’ qualitative analysis highlights that management is confident about the opportunities available to them in the mid-tier Android space, as well as the potential of their M5 product. Furthermore, while analyst estimates are somewhat bearish, they have been increasing consistently over the past year, which is a bullish signal. Given growing management and analyst confidence surrounding the firm’s fundamentals, current market expectations are too bearish, and equity upside may be warranted.
Market Insights
Most Compelling Long Ideas
FB, ZG, DLTR, DHI, GOOGL
Most Compelling ECF™ Inflections
CRUS, ABC, AYI, WCN, MA
Company Specific Highlights & Insights:
AAPL, ABT, ALV, AMZN, AWK, LSE:CPG, CVS, JNPR, KSU, MA, MNTA, MTG, OC, RCL, RDN, SCI, TEL, TXT, URI, UTX, X, ZG
If you are interested in seeing any of the highlighted analyses, please contact the Valens team at valens@valens-securities.com
