This week has been positive for Silicon Motion Technology Corporation (NASDAQ:SIMO) shareholders. The company announced its latest annual results, and shares climbed 3.7% to $55.57.
Silicon Motion reported $804 million in revenue, which was in line with what analysts expected. However, the earnings per share (EPS) of $2.69 surpassed expectations by 3.2%. This is a crucial moment for investors. They can assess the company’s performance, compare it to expert forecasts, and see if expectations for the business have shifted.
We’ve compiled the most recent forecasts to determine if analysts have changed their earnings models following these results.
The current consensus from nine analysts is for Silicon Motion’s revenue to be $826 million in 2025. This represents a modest increase of 2.8% compared to last year. However, EPS is expected to drop by 6.9% to $2.51 during the same period. Previously, analysts projected revenues of $850.9 million and EPS of $3.09 for 2025. Their outlook has become less optimistic after the latest earnings report.
Despite these downgrades, analysts maintained their price target at $75.78, indicating they don’t anticipate a long-term impact on the company’s valuation. It’s also interesting to note that the most optimistic analyst predicts a price target of $95.00, while the most cautious sets it at $50.00. While there is a bit of disagreement among analysts, the range of estimates is fairly tight, suggesting some predictability in the stock’s future.
Additionally, it’s important to compare these forecasts with the company’s past performance and the broader industry. Expectations show that revenue growth for Silicon Motion will slow significantly, with projected annual growth of just 2.8% by the end of 2025. This contrasts sharply with their historical growth rate of 7.4% over the last five years. In comparison, other companies in the industry expect to see an average annual revenue growth of 17%. Clearly, while Silicon Motion anticipates slower growth, the broader industry is poised for a stronger performance.
The Bottom Line
The main concern is the reduction in earnings per share estimates, which may signal challenges ahead for the company. The downgrade in revenue also raises flags, especially when compared to the industry standards. Nevertheless, the earnings per share are more crucial for understanding the company’s intrinsic value. The consensus price target didn’t change much, indicating that the overall value sentiment remains stable despite the new estimates.
Looking forward, it’s clear that long-term prospects are more important than short-term earnings. We have forecasts extending to 2027 that you can view on our platform.
However, it’s essential to remain aware of investment risks. There’s at least one warning sign related to Silicon Motion that investors should consider as part of their evaluation process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts without bias. This is not financial advice, and does not constitute a recommendation to buy or sell any stock. Our analysis may not consider the latest price-sensitive company announcements or qualitative insights. Simply Wall St holds no positions in any stocks mentioned.
