Here's Why Silicon Motion (SIMO) Fell More Than Broader Market

Silicon Motion (SIMO) closed the most recent trading day at $74.29, moving -1.17% from the previous trading session. The stock's performance was behind the S&P 500's daily loss of 0.11%. Elsewhere, the Dow saw an upswing of 0.91%, while the tech-heavy Nasdaq depreciated by 0.82%.

Coming into today, shares of the chip company had gained 18.27% in the past month. In that same time, the Computer and Technology sector gained 8.76%, while the S&P 500 gained 5.17%.

The investment community will be closely monitoring the performance of Silicon Motion in its forthcoming earnings report. It is anticipated that the company will report an EPS of $0.52, marking a 45.83% fall compared to the same quarter of the previous year. Our most recent consensus estimate is calling for quarterly revenue of $180.4 million, down 14.37% from the year-ago period.

For the full year, the Zacks Consensus Estimates project earnings of $3.41 per share and a revenue of $815.03 million, demonstrating changes of -0.58% and +1.43%, respectively, from the preceding year.

Investors should also note any recent changes to analyst estimates for Silicon Motion. These latest adjustments often mirror the shifting dynamics of short-term business patterns. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 0.21% increase. As of now, Silicon Motion holds a Zacks Rank of #2 (Buy).

Looking at its valuation, Silicon Motion is holding a Forward P/E ratio of 22.02. This denotes a premium relative to the industry average Forward P/E of 20.09.

One should further note that SIMO currently holds a PEG ratio of 10.39. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. By the end of yesterday's trading, the Computer - Integrated Systems industry had an average PEG ratio of 4.32.

The Computer - Integrated Systems industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 22, which puts it in the top 9% of all 250+ industries.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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