GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

A Few Reasons to Invest in SanDisk for the Long Run

July 24, 2014 | About:
jaggom

jaggom

0 followers

The storage market is developing and companies that are at the front line of this industry have witnessed quick development. Flash Memory Drives & Solid State Drives ((SSD)) are witnessing immense request because of their application in various devices and distributed storage.

Sandisk (SNDK) is one of the heading manufacturers and suppliers of flash memory storage drives. The organization reported its second-quarter earnings in July and recorded revenue of $1.48 billion, which was up an impressive 43% from last year.

The thriving interest for Sandisk's products and the increase in cost of its micro SD cards helped the rise in margins. Most cellular telephone manufacturers now give a card slot in their devices, prompting increased interest for memory cards. Customers looking to store more information have prompted the development of micro SD cards, pushing up interest in the process.

Sandisk has a diverse item arrangement of implanted solutions. Its products are used in various devices like smartphones, tablets, advanced cameras, and so forth. It is also one of the heading providers of USB flash drives and solid state drives. Ssds are seeing great request because of their application in server farms and servers.

Sandisk is looking to bolster its position in this segment and it as of late procured Smart Storage for $307 million. This acquisition will enhance Sandisk's position in the enterprise storage solutions market for Ssds. Sandisk will also be giving solutions to a more extensive spectrum of customers as it will have the capacity to tap a bigger market in enterprise SATA products.

What's to come is brilliant

Sandisk is looking to benefit as much as possible from the SSD market. The cloud market is driving SSD request through server farms and servers. As specified prior, Sandisk's acquisition of Smart Storage will be a key variable in driving sales in this segment. In the SSD market, Sandisk estimates development of 25% in 2014 and the organization has positioned itself well to execute this development through its latest acquisition.

Indeed analysts are truly optimistic about the organization's development. Sandisk's earnings are estimated to develop at a CAGR of 25% for the following five years. Henceforth, at a trailing P/E of just under 21 and with a profit yield of 1.5%, Sandisk looks like a solid investment proposition.

Competitors – Sony and Samsung

Sony (SNE) is one organization equipped for testing Sandisk on various fronts. Sony has a diverse item portfolio and is the leading contender of Sandisk in flash memory storage devices.

Sony Mobile, a subsidiary of Sony, has significantly helped the sales development of the organization. Sony is certain of its Mp&c (Mobile products and Communication) division's prospects. The reason behind this is simple as in the first quarter, this segment recorded impressive revenue development of 36.2% as contrasted with the year-prior quarter.

As of late, Sony has released various models of premium smartphones which did not have any outer storage slots. This thwarted sales of companies such as Sandisk that fabricate storage memory. The combination of storage devices helped Sony increase its margins and boost its own particular in-house request.

After its late success in smartphones, Sony further plans to extend its portfolio with more smartphones and tablets. This means that there will be higher in house consumption of memory cards at Sony and take some wind out of Sandisk's sales.

Samsung making moves

Samsung (SSNLF) is one of the leading manufacturers of smartphones and is also the worldwide pioneer in the memory business. Despite Apple being its rival in the smartphone segment, it still pays Samsung a substantial sum consistently for various components (processors and memories).

Smartphone components made by Samsung create sizable revenue for the organization. Samsung's memory item portfolio for the most part comprises of NAND flash memory chips and Ssds.

In July, it uncovered 840 EVO, an elite SATA-based SSD which can store up to 1tb of information. For combination into the 840 EVO, Samsung started assembling 10-nanometer 128 GB NAND flash memories in April. This is the industry's most smaller superior memory, used by the 840 EVO.

Conclusion

Despite the fact that the PC market is blurring, Ssds are a brilliant spot in the storage market. As per IHS, the SSD market is forecasted to be worth $10.9 billion. With a CAGR of 34.7% estimated somewhere around 2011 and 2016, the SSD market could arrive at $21 billion in revenue by 2015.

Sandisk is overall positioned in this market through its item innovations and acquisitions. The organization is also exchanging at an inexpensive trailing P/E different and analysts are expecting solid development going ahead. Thus, Sandisk looks like a decent wager at current price


Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK