Lattice Semiconductor Corp (LSCC, Financial) has recently experienced a daily loss of -18.64%, and a 3-month loss of -40.28%. Despite this, the company's Earnings Per Share (EPS) (EPS) stands at 1.46. This raises the question: Is the stock significantly undervalued? This article aims to answer that question by providing a detailed valuation analysis of Lattice Semiconductor. We invite you to delve into this analysis to understand the intrinsic value of LSCC.
A Snapshot of Lattice Semiconductor Corp (LSCC, Financial)
Lattice Semiconductor is a leading developer of semiconductor technology, offering products, solutions, and licenses to its customers. The company primarily serves consumer, communications, and industrial markets, enabling them to build technology with more computing power, higher resolution video, and reduced energy consumption. Despite its global presence, most of its sales are derived from customers in Asia. With a market cap of $7.50 billion and sales of $722.90 million, LSCC's stock price stands at $54.75, significantly lower than its GF Value of $87.51.
Deciphering the GF Value
The GF Value is a proprietary measure that estimates the intrinsic value of a stock. It combines historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line, a part of our summary page, provides an overview of the fair trading value of the stock. If the stock price significantly exceeds the GF Value Line, it indicates overvaluation and potential poor future returns. Conversely, if the stock price is significantly below the GF Value Line, it suggests undervaluation and probable higher future returns.
According to GuruFocus, Lattice Semiconductor (LSCC, Financial) appears to be significantly undervalued. Given its current price of $54.75 per share, the stock's long-term return is likely to be much higher than its business growth.
Assessing Financial Strength
Investing in companies with low financial strength can lead to permanent capital loss. Therefore, it's crucial to examine a company's financial strength before purchasing its shares. A good starting point is to look at the cash-to-debt ratio and interest coverage. Lattice Semiconductor has a cash-to-debt ratio of 1.71, ranking below 53.16% of 903 companies in the Semiconductors industry. Despite this, GuruFocus ranks Lattice Semiconductor's financial strength as 9 out of 10, indicating a strong balance sheet.
Profitability and Growth
Companies that consistently show profitability over the long term offer lower risk for investors. Lattice Semiconductor has been profitable for 6 out of the past 10 years. With a revenue of $722.90 million and an EPS of $1.46 in the past twelve months, its operating margin of 30.06% ranks better than 93.39% of 953 companies in the Semiconductors industry. Overall, the profitability of Lattice Semiconductor is ranked 7 out of 10, indicating fair profitability.
Growth is a crucial factor in a company's valuation. Lattice Semiconductor's 3-year average annual revenue growth rate is 16.8%, ranking better than 62.01% of 874 companies in the Semiconductors industry. The 3-year average EBITDA growth rate is 31.3%, ranking better than 60.98% of 774 companies in the same industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to the weighted average cost of capital (WACC) can provide insights into its profitability. The ROIC measures how well a company generates cash flow relative to the capital it has invested in its business. The WACC is the rate that a company is expected to pay on average to all its security holders to finance its assets. When the ROIC exceeds the WACC, it suggests the company is creating value for shareholders. For the past 12 months, Lattice Semiconductor's ROIC is 37.29, and its cost of capital is 14.18.
Conclusion
In conclusion, Lattice Semiconductor (LSCC, Financial) appears to be significantly undervalued. The company's financial condition is strong, its profitability is fair, and its growth ranks better than 60.98% of 774 companies in the Semiconductors industry. To learn more about Lattice Semiconductor stock, you can check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
