October 31, 2018

NXPI – Market expectations are for material declines in Uniform ROA, but management is confident about their automotive and microcontroller businesses, revenue, and Kinetis


  • NXP Semiconductors N.V. (NXPI:USA)currently trades well below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 10.7x Uniform P/E, implying bearish expectations for the firm. However, management is confident in the strength of their automotive and microcontroller businesses, their strong sales performance, and the potential market size for Kinetis
  • Specifically, management generated an excitement marker when saying that they are helping move the automotive market towards autonomous driving. They are also confident in their ability to create complete solutions for their customers, and that their microcontroller business has been very strong. Additionally, they are confident in the mass market for the Kinetis, and that expanding their margins is the key to producing strong returns for shareholders. Moreover, they are confident that their revenue was at record high levels in Q2, at just over $1bn, and that they have contributed to safer driving technology for the automotive market. Furthermore, they are confident that the only area they experienced headwinds in was auto microcontrollers in Q2
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