RF Micro Devices (RFMD, Financial) has been a great stock to hold for investors in 2014. Shares of the company have appreciated over 100% year-to-date, and this trend doesn’t look like it will end any time soon. The company is taking shrewd initiatives to ensure growth, which is why investors should continue holding the stock for the foreseeable future. I’ll discuss about the company’s future in this article, but first let’s take a look at the recent quarterly results.
Beating the Estimates
Consistently beating the analysts’ estimates has greatly contributed to RF Micro’s growth this year. The company has managed to surpass the target on revenue as well as earnings for the past 4 quarters, and this quarter was no exception.
RF Micro Devices, in its second quarter results, reported a profit of $63.3 million, which translates to adjusted earnings of $0.30 per share, beating the consensus estimate of $0.27 per share.
Topping the Street forecasts, revenue came in to be $362.7 million, while analysts expected $348.3 million. Per-share earnings of the current quarter, ending in December are expected to be 33 cents, a 10% increase from last year.
What does the Future hold?
Over the mobile data scene, customers are requesting more bandwidth to backing their data-hungry applications; transporters are obliging more prominent throughput from their accessible range; and gadget makers are looking for more noteworthy usefulness inside the same foot shaped impression, with an inclination towards more extensive system scope in worldwide and lead gadgets. In each one case, RFMD arrangements are a key empowering innovation.
Going over to move from simple to advanced cell measures, each increment in the productive conveyance of mobile data has relied on upon some mix of expanded RF substance, expanded RF usefulness or expanded RF execution. We've seen download paces rocket from kilobits for every second to several megabits for every second. What's more throughout the following a few years, our industry is focusing on 1 gigabyte for every second. These increments have delivered either new regulation plans or expanding bandwidth.
Between these generational cycles, from simple to 2g, from 3g to 4g and from 4g to 5g, extra bandwidth can be added to support throughput. Yet this brings new difficulties for gadget producers, base station makers and system administrators, making new open doors for suppliers of RF arrangements.
In each one case, RFMD aides fathom these difficulties, decreasing framework multifaceted nature, contracting item foot shaped impression, augmenting battery life and empowering more effective conveyance of mobile data.
Benefiting from Smartphones
The teardown of Apple’s (AAPL, Financial) iPhone 6 and Samsung’s (SSNLF, Financial) Galaxy S5 reveals that RF Micro Devices has won strong content in both the smartphones. With the sales of these devices expected to surpass that of their predecessors, RF Micro Devices is well positioned to benefit from this.
Also, given that the Apple and Samsung have regularly used RF Micro’s chips in their smartphones, it may not come in as a surprise if the companies decide to use its chips in other devices as well, thereby making RF Micro a very safe investment.
Conclusion
Looking at the factors mentioned above, RF Micro Devices still looks like a good buy as it can still deliver more upside. The company’s stock has appreciated 105% in 2014, however with the with the soaring sales of the iPhone 6 and the company’s smart steps to increase its gross margin, it should continue to beat the earnings estimates in the quarters to come, hence making it a great buy.
