Cree (CREE, Financial) continues to tap growing opportunities in an LED lighting market that looks attractive in the long run. Its innovation in new high-power lighting applications and more efficient products such as the XLamp XP-L are creating new value for its customers across the world. This should enhance its results going forward.
Cree is making significant progress in areas that are critical to tapping this strong growth. Its new XLamp XP-L product better reflects this innovation. This product is more than 50% brighter than previous generation products. In addition, the company has recently announced the ZR high efficiency troffer. It product is expected to commercially be available in 150 lumens per watt LED troffer in the market.
This product exploits Cree TrueWhite Technology. This technology enables the company to reduce energy consumption by more than 70% as against the old-fashioned fluorescent troffers. Moreover, this technology has relatively greater efficiency fundamentally than competing LED products.
Setting new bar in LED lighting
Cree is strategically investing in new products and in LED technology. Cree remains on track to develop the next generation LED technology platform. This platform will enable Cree to redefine high power LED performance. Also, this new platform integrates more than double the lumen per LED. This is indeed a substantial advancement in epitaxial structure, chip architecture, and an advanced light conversion system.
Cree plans to roll over its first production for these devices in the third-quarter fiscal 2015. It is also working on new design cycle for these new products that should assist the company to regain the momentum in the LED business.
In addition, the company remains quite upbeat to develop next generation consumer LED bulb. This new-generation consumer LED blub is integrated with better light, better looks and at a better price that should drive its top as well as bottom line performance in the future. Moreover, these bulbs will provide ample amount of reasons to consumers across the region to switch over to LED. This looks an eye-catching investment and should drive shareholders value in the long-run.
Building the brand
Its strategic pains of enhancing LED lighting growth should enable the company to build Cree Brand in both the consumer as well as the commercial markets. Its LED lighting business grew 51% year on year basis, which clearly illustrates its hold on the market for LED fixtures and LED bulbs. Its new products are gaining traction in the market through multiple sales channels. Looking ahead, the company is focused on creating a new performance standard for LED lightings that should drive its lighting growth and better adoption of its LED technology and growth for its brand.
Partnerships to advance its LED technology
Additionally, the company is expanding its business. It is working with manufacturing partners that should reinforce growth for its LED technology. Also, this strategic move should enable the company to bring innovative technology to the markets.
On the same wavelength, the company has entered into a relationship with Lextar. This relationship is built upon supplying mid-power LEDs. The company should be in a better position to tap its mid-power lighting markets through this partnership. Moreover, it is strategically enlarging its portfolio in the high-power market that should drive growth for its business in the long-run. In addition, Cree is expected to gain benefit of cross-license technology from Lextar that should enhance its portfolio of technologies.
Nevertheless, Cree is expanding its networks and investing aggressively on the innovations that should differentiate the company’s offering and win extra market share in the future.
Conclusion
Cree looks a good bet as the stock shares cheap valuations. The stock is trading at the trailing P/E of 35.40 and forward P/E of 20.11, which indicates a lot of rooms to grow for the stock in the future. Also, the PEG ratio of 1.62 continues to support this growth over the coming periods.
