10-year

10-Year Anniversary Promotion (20% off)

Join GuruFocus Premium Membership Now for Only $279/Year

Once a decade discount

Save up to $500 on Global Membership.

Don't Miss It !

Free 7-day Trial
All Articles and Columns »

A Few Reasons Why Synaptics Is a Sound Long-Term Investment

August 08, 2014 | About:
rusticnomad

rusticnomad

0 followers

Synaptics (SYNA) is on track to profit from smartphones and PCs. The company has landed spots in some of the most well-known devices across the mobile device spectrum, and looking at its illustrious clients, it should be able to continue its strong momentum going forward. So let us take a closer look at Synaptics' strong clientele and see why it can be a solid pick for the long run.

Gaining traction

Synaptics' chips are present in the Galaxy S4 model with its unique 3D touch capabilities that will allow the Galaxy S5 users to hover their finger over the touchscreen to make selections and scroll through information. Above all, Synaptics is the first company to power the touch interface in back-to-back versions of the most popular Android smartphone, a testament to its reputation for unmatched innovation and unparalleled in-depth system level engineering support.

Synaptics was pleased to see Samsung joining the company as part of the FIDO Alliance Board of Directors. FIDO is constructed to deliver open specifications for universal strong authentication, enabling FIDO-compliant authentication methods to be interoperable, more secure and easier to use. Also, FIDO is expected to help Synaptics in expanding the value and market opportunities for its fingerprint identity solutions with continued momentum through the efforts of key industry players such as Bank of America, Google, Lenovo, PayPal and MasterCard.

Moving into new markets

Apart from this, its biometric solutions are gaining market due to an increase in sales of mobile devices. Synaptics is strategically engaged with various OEM partners in multiple programs and developments in the newest line of sensor products, which will certainly help the company to drive growth for its business as the company is focused on mobile touchscreens to bring a wide range of solutions and designs. For example, the HTC One, or M8 from HTC, received an impressive 8.5 rating from The Verge, who noted its performance and design. M8 was also named the best smartphone at Mobile World Congress by the GSMA.

Additionally the company is also expected to benefit from ClearPad solutions, as Synaptics has enhanced its human interface with Nokia Windows 8.1 phones. Synaptics has plans to ship Nokia 8.1 phones, including the flagship Lumia 930, with the 5-inch clear black screen for unmatched viewing of images and video even in bright daylight during the quarter. Besides, the company is also powering the human interface with Asha 230 entry-level full touch mobile phone, which is designed for users experiencing touch on their phone for the first time.

Synaptics is also expected to benefit from its large screen segment. Its key tablet wins include the Samsung Galaxy TabPro 8.4 and the Lenovo Yoga Tablet 8.10. Going forward, Synaptics’ next touchscreen-enabled notebook PC design cycle is geared for the back-to-school season, and the company expects to participate through mass shipments with multiple tier 1 notebook OEMs.

In addition, the company has recently announced Precision TouchPad implementation with Acer for its E Series of notebook PCs. This will enhance its growth going forward. Synaptics’ Precision TouchPad solutions are co-engineered with Microsoft to deliver high-performance Precision TouchPad that provides a consistent uniform experience across implementations.

Conclusion

Synaptics is currently trading at a trailing P/E of 52.34 and a forward P/E of 17.06. Also, it has a PEG ratio of 0.91 for the next five years. The company has operating cash flow of $123.6 million, while its total outstanding debt is nil. Also, it has free cash flow of $64.83 million. Moreover, analysts have predicted earnings CAGR of 21.57% for the next five years, signifying potential growth prospect of Synaptics for the future.


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