Intersil Outlook Stays Neutral – Analyst Blog
Source: http://www.zacks.com/stock/news/14592/Intersil+Outlook+Stays+Neutral+-+Analyst+BlogPosted on Monday, September 8th, 2008 | In Stocks to Watch
We are maintaining our Hold rating on the shares of Intersil Corporation (ISIL). June quarter revenue was in-line with consensus estimates, while the EPS exceeded. Forward guidance is for a 1-3% revenue increase in the next quarter.
Shares of Intersil are currently trading at a 14.3x multiple of our current 2008 earnings estimate (P/E). IntersilÂ’s product breadth and increasing penetration indicate that it is relatively well positioned in the markets in which it operates. This could be a key factor in the next two years, if the recessionary trends continue. Recent acquisitions have augmented the product portfolio and increased the percentage of consumer and industrial products in the mix, which is a positive for revenue growth and margin expansion.
The management is improving the mix of products, and also implementing other initiatives to reduce costs and maintain profitability. Recent restructuring efforts are also expected to have a positive impact. The company has $2.75 in cash per share. We also analyzed the ROE [return on equity] of the company (9.1% on TTM [trailing 12-month] basis), breaking it into its three components net margin, asset turnover and equity multiplier. The net margin has held relatively steady over the last three years, although it dipped somewhat in 2005.
The asset turnover has been increasing from quarter to quarter during the same time period. This indicates that the company is managing assets efficiently, and converting them to revenue at an accelerated rate. The equity multiplier has also held relatively steady. This ratio, at over 100%, is a big positive, considering the companyÂ’s debt free balance sheet. We are reiterating our $30 price target, which corresponds to a P/E multiple of 18.3x.
Sejuti Banerjea contributed to the report.
Read the full analyst report on ISIL
“ISIL” Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research
Last 5 posts by Zacks Market Commentaries
- VIP Falls Behind Expectations - Analyst Blog - November 25th, 2009
- J. Crew Beats Zacks Estimates - Analyst Blog - November 25th, 2009
- No Change in Deere's Outlook - Analyst Blog - November 25th, 2009
- Sprint Acquires Virgin Mobile USA - Analyst Blog - November 25th, 2009
- Provenge Action Date Assigned - Analyst Blog - November 25th, 2009
 About Zacks Market Commentaries (http://www.zacks.com/)
Zacks Market Commentaries |
No recommendations, either expressed or implied, are being made to buy, sell, hold or short any of the mentioned stocks. No legal, tax or accounting advice is expressed or implied. Always contact your attorney, CPA, or tax advisor before acting on any legal or tax issues. StraightStocks.com is not responsible for the content, products, or services of any of the advertisers on this site. StraightStocks.com receives compensation from advertisers on this blog. Services and products referred to herein are trademarks, registered trademarks, servicemarks, and/or registered servicemarks of their respective trademark or servicemark owners.