Cirrus Logic Stock Rallies 45% in Past Six Months: Is It Worth a Buy?

Core Viewpoint - Cirrus Logic, Inc. (CRUS) has demonstrated strong stock performance, gaining 45.4% over the past six months, significantly outperforming its sub-industry and major indices [1][2]. Financial Performance - The company's earnings have consistently exceeded the Zacks Consensus Estimate over the last four quarters, with an average surprise of 56.6% [3]. - For the second quarter of fiscal 2025, management anticipates revenues between $490 million and $550 million, with a Zacks Consensus Estimate of $520 million, reflecting an 8.1% year-over-year increase [5]. Product Development and Market Demand - CRUS is experiencing increased demand for its products, particularly in the smartphone market, and is ramping up production of new technologies ahead of upcoming smartphone launches [3]. - The company launched a new lineup of digital-to-analog converters and an ultra-high-performance audio CODEC aimed at recording artists and audiophiles, which are expected to enhance performance significantly [4]. Market Expansion and Future Projections - The company is focusing on product innovation and expanding into new markets, with expectations that the High-Performance Mixed-Signal and Audio Serviceable Available Market (SAM) will exceed $5.7 billion and $3.3 billion, respectively, by 2028 [4]. Financial Health and Shareholder Returns - As of June 29, 2024, CRUS had cash and cash equivalents of $491.4 million and no long-term debt, positioning the company well for strategic acquisitions and shareholder distributions [6]. - The company has been active in share repurchase, buying back 361,218 shares worth $41 million in the last reported quarter, with $274.1 million remaining under its repurchase authorization [6]. Valuation Metrics - CRUS stock is currently trading at a forward 12-month price/earnings multiple of 18.45, which is lower than the industry average of 32.1, indicating a potential investment opportunity [8]. Analyst Sentiment - Despite some downward revisions in earnings estimates, the increasing business pipeline and attractive valuation make CRUS a compelling investment opportunity, supported by a Zacks Rank 1 (Strong Buy) and a Growth Score of A [10].