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Chuck Royce Increases His Holdings in Cirrus Logic and Key Tronic
Posted by: Monica Wolfe (IP Logged)
Date: June 6, 2013 05:19PM
Chuck Royce, President and Co-CIO of Royce & Associates, currently holds 1,366 stocks valued at nearly $33 billion. In his commentary on first quarter 2013, Royce said, “I think the conditions remain favorable for equities... As we've seen from the banking crisis in Cyprus, there are always surprises and challenges that none of us can predict. Some of these unforeseen events will help the market and some will reverse its progress.”
On May 31, Chuck Royce upped his holdings in the companies Key Tronic Corporation (KTCC) and Cirrus Logic (CRUS).
Cirrus Logic (CRUS)
Royce made the most significant change in his holdings on Cirrus Logic by increasing his stake 643.44%. Royce bought 4,625,079 shares at an average price of $18.25 per share. Since his buy the price per share has increased about 1%. Royce now holds on to 5,343,879 shares of Cirrus Logic, representing a 0.26% impact to his portfolio.
Chuck Royce’s holding history of CRUS:
His increase in the company comes as Cirrus Logic’s price nears a 52-week low of $17.36 per share.
About Cirrus Logic:
Cirrus Logic develops high-precision, analog and mixed-signal integrated circuits for a broad range of customers. Building on its diverse analog and signal-processing patent portfolio, Cirrus Logic delivers products for a variety of audio and energy-related applications.
Recent Happenings at Cirrus Logic:
In Cirrus Logic’s most recent quarterly financial release, fourth quarter and full-year fiscal 2013, the company reported:
· Revenue was up 87% year-over-year to $207 million in the fourth quarter.
· Fourth quarter results of GAAP diluted earnings per share of $0.39 and non-GAAP diluted EPS of $0.59.
· Full year revenue of $810 million
· Gross margin of 48%.
· GAAP diluted EPS of $2.00 and non-GAAP EPS of $3.24 for the full year.
Financials of Cirrus Logic:
The company’s gross margin has been in a long-term decline. The average rate of decline per year is about 2.3%.
The company’s P/B ratio and P/S ratio are also close to one-year lows of 2.12 and 1.38, respectively.
According to the Peter Lynch Valuation Chart, Cirrus Logic currently appears to be a good buy, as the CRUS price is sitting beneath the CRUS price at P/E= 15, meaning that the stock appears to be undervalued.
Cirrus Logic has a market cap of $1.33 billion; its shares were traded at around $17.96 with a P/E ratio of 8.90 and a P/S ratio of 1.50. The company had an annual average earnings growth of 96.9% over the past five years.
To see the other gurus that hold stake in Cirrus Logic, check out their holding history here.
Key Tronic Corporation (KTCC)
Chuck Royce made another, smaller increase on May 31. Royce increased his position in Key Tronic by 56.18%. The guru added an additional 393,642 shares to his stake at an average price of $11.36 per share. Since his increase, the price per share of Key Tronic has decreased approximately 2% from his average purchase price.
Key Tronic is a relatively new purchase for Royce; he added it to his portfolio during the most recent quarter. Since that buy, he has seen a 4% increase on the price of the stock.
Chuck Royce now holds 1,094,291 shares of Key Tronic, representing 10.43% of the company’s shares outstanding.
About Key Tronic:
Key Tronic has a history of 40 years as an original equipment manufacturer (OEM) and has transitioned into one of the most successful Electronic Manufacturing Service (EMS) providers in the industry today. Key Tronic specializes in PCB assembly, plastic molding and full product assembly, with products ranging from simple consumer devices to complex, high-end commercial and industrial electromechanical products.
Recent Happenings at Key Tronic:
On May 28, Key Tronic announced that it intends to acquire Sabre Manufacturing for approximately $5.1 million in cash. Sabre maintains an annual revenue of over $7.0 million and approximately 90 employees, Sabre is a sheet metal fabrication company out of a facility near the Key Tronic campus in Juarez, Mexico. Key Tronic reports that the purchase will be funded by Key Tronic’s available cash and bank credit line. The transaction is anticipated to close in July and to be immediately accretive to earnings.
Financials of Key Tronic:
The company’s most recent quarterly results, third quarter fiscal 2013, reported:
· A revenue of $84.3 million, compared to $95.5 million from third quarter 2012.
· Net income of $2.9 million, compared to $3.4 million in 2012.
· The gross margin was at 9% and operating margin was 4%, compared to 9% and 5%, respectively, in the same period of fiscal year 2012.
The analysis on Key Tronic reports:
· Predictable revenue and earnings growth.
· Operating margin expansion.
· The price is close to a 10-year high of $12.22.
· The P/S ratio is close to a one-year high of 0.34.
The Peter Lynch Valuation of Key Tronic shows that the company appears to be undervalued:
Key Tronic has a market cap of $120.9 million; its shares were traded at around $11.03 with a P/E ratio of 8.50 and P/S ratio of 0.30. The company had an annual average earnings growth of 7.3% over the past 10 years. GuruFocus rated Key Tronic the business predictability rank of 2.5-star.
Chuck Royce is currently the only guru that holds any shares of Key Tronic.
You can view Chuck Royce’s current portfolio here. Also check out his Undervalued Stocks, High Yield Stocks and Top Growth Companies.
Guru Discussed: Chuck Royce: Current Portfolio, Stock Picks
Stocks Discussed: CRUS, KTCC,