Should You Think About Buying Cirrus Logic, Inc. (NASDAQ:CRUS …

Cirrus Logic, Inc. (NASDAQ:CRUS), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain?

Today I will analyse the most recent data on Cirrus Logic’s outlook and valuation to see if the opportunity still exists. View our latest analysis for Cirrus Logic

What Is Cirrus Logic Worth?

The share price seems sensible at the moment according to my price multiple model, where I compare the company’s price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows.

I find that Cirrus Logic’s ratio of 17.96x is trading slightly above its industry peers’ ratio of 17.81x, which means if you buy Cirrus Logic today, you’d be paying a relatively sensible price for it. And if you believe Cirrus Logic should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Furthermore, it seems like Cirrus Logic’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers.

This is because the stock is less volatile than the wider market given its low beta.

What does the future of Cirrus Logic look like?

earnings-and-revenue-growthNasdaqGS:CRUS Earnings and Revenue Growth March 28th 2023

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. However, with a negative profit growth of -13% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Cirrus Logic.

This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Currently, CRUS appears to be trading around industry price multiples, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high?

Before you make a decision on CRUS, take a look at whether its fundamentals have changed. Are you a potential investor? If you’ve been keeping tabs on CRUS for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing.

Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on CRUS should the price fluctuate below the industry PE ratio. With this in mind, we wouldn’t consider investing in a stock unless we had a thorough understanding of the risks.

At Simply Wall St, we found 1 warning sign for Cirrus Logic and we think they deserve your attention. If you are no longer interested in Cirrus Logic, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

What are the risks and opportunities for Cirrus Logic?

Cirrus Logic, Inc., a fabless semiconductor company, provides low-power and high-precision mixed-signal processing solutions in the United States and internationally.
Show more

View Full Analysis

Rewards

  • Earnings are forecast to grow 3.03% per year

  • Earnings grew by 28.1% over the past year

Risks

  • Significant insider selling over the past 3 months

View all Risks and Rewards

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Simply Wall St has no position in any stocks mentioned.

Tags:

fullers listed on couponmatrix.ukhalfords-autocentres listed on couponmatrix.ukone listed on couponmatrix.uksephora listed on couponmatrix.ukthe-game-collection listed on couponmatrix.ukwookey-hole-caves listed on couponmatrix.uk
fullers listed on couponmatrix.ukOperating over 300 pubs in the hearty south of England, Fuller’s has long built a reputation as the place to be on a sunny summer Saturday. The perfect way to indulge in a weekend celebration with friends, customers can freely use some Fuller’s vouchers to kick back a round or three for far less. Round up your trip to your local Fuller’s establishment with a look overt their fresh selection of seafood and meat to ensure you leave with your thirst slaked and your hunger satisfied.
halfords-autocentres listed on couponmatrix.ukIf you’ve got something that needs fixing up, Halfords is your best bet for getting the job done. Halfords are trusted retailers of car parts, bicycles, camping equipment and everything outdoors, combining great quality products with affordable prices. Whatever your outdoor needs, Halfords has the solution – and if you add one of our Halfords discount codes, you’ll enjoy even more savings.
one listed on couponmatrix.ukIf you're looking for a great deal on web hosting, look no further than One.com. Right now, you can use our exclusive One.com discount code to save even more on your purchase. Whether you’re looking to register a domain, host enhanced email services or build out your own WordPress website from scratch, One.com makes it easy to run, manage and create the web assets you need. At Groupon, we work hard to find the best deals and discounts for our users. That's why we're excited to offer exclusive One.com discounts in the form or promo codes and discount domains. Whatever project you have in mind for a new URL, don’t forget to use our Groupon deals to cut the cost of some essential web hosting services. From free domain names to generating your own wes tore for half price, you’ll be amazed at the wonders we work at One.com One.com offers a variety of web hosting plans to meet your needs. And right now, you can use one of our One.com promo code to save on one of our most popular plans - the Business Plan. This plan includes unlimited storage, bandwidth, and email accounts, so it's perfect for businesses of all sizes. Plus, with our promo code, you can get this plan for an even lower price. So don't wait - get started today!
sephora listed on couponmatrix.ukSephora is like the big sister of the beauty world, and it’s now Feel Unique’s brand-new home! Choose from thousands of the top brands in makeup, fragrance and skincare – instead of a Feel Unique discount code, you’ll want a Sephora promo code from Groupon instead. Sephora is stocked with world-leading brands like Huda Beauty, DIOR and Charlotte Tilbury, and there are now even more great offers to enjoy, including 10% off your favourite brands, free gifts and Sephora voucher codes.
the-game-collection listed on couponmatrix.ukThe Game Collection is a one stop shop for all your gaming needs. From preorders, new releases and retro games to apparel, toys and accessories, you’ll find everything you need at an affordable price with this great retailer! Make the most of a The Game Collection promo code to save on bestsellers for Xbox, Playstation, Nintendo and PC - or to cut the cost of a shiny new console! With five star customer service and plenty of awards to boot, you can trust The Games Collection for the best selection and prices!
wookey-hole-caves listed on couponmatrix.ukHead down to Wookey Hole to see first hand nature at its finest. With over 20 caves and attractions available, Wookey Hole is a treat for the whole family. The ancient caves are national treasures and promise an awe-inspiring day of looking and wondering. Go deep underground and see violet lakes, crystal clear waters and much more. With Wookey Hole vouchers you can enjoy the magic of nature for less. Take the whole family, go on a date or explore yourself, Wookey Hole caves and attractions truly has something for everyone.