Synaptics Inc. (SYNA, Financial) is one of the leading manufacturers and suppliers of chipsets and sensors that are ingredients to various gadgets and smart devices. The company maintains a strong product portfolio that has been catalytic to the growth of the company.
Outstanding performance of the quarter
Synaptic recently posted its third-quarter results for fiscal 2015, and it displayed an outstanding performance as it was all growth oriented. Consolidated revenues witnessed a voluptuous growth 134% year over year, to record $477 million as compared to $204 million in the same term last year. The revenue stream for the company is from a product mix comprising of Mobile and PC products. Mobiles Products sales recorded $417.4 million, up by 177% year over year, contributing 87% of the consolidated revenue. PC products recorded total sales of $60.2 million, up 12% year over year, contributing 13% to the total revenue.
The company posted a Net income of $31.4 million, in the third quarter of the fiscal 2015 as compared to net loss of $40 million in the same quarter last year.
The fiscal 2015 is delivering strong growth for Synaptic. The cumulative revenue for the first three quarters records $1,224 million, up by 93.7% as compared to cumulative revenue of $632 million in similar tenure of 2014. Cumulative Net income of first three quarters of 2015 was recorded as $79 million as compared to cumulative net income of $12 million for first three quarter fiscal 2014.
Touch screen can propel growth momentum
Ever since the launch of iPhone in 2007, the touch screen market has turned out to be one of the fastest growing display market. The touch screens now find its application in numerous devices, and this has influenced the growth of this market. The touch screen market is now growing 10 times faster than the overall display market. The market size of touch screen was $7.6 billion in 2011 and is anticipated to reach $12.4 billion by end of this year, recording a compound annual growth rate of 15% every year. The company collaborates with OEMs globally to design and develop touch screens, Touchpads and biometrics. Each of these products has huge market size that provides tailwinds to the revenue of Synaptics.
Journey ahead
This year, the consensus of analyst expects the company to grow by 36.7%, and next year growth is expected to be around 18.9%. Furthermore in the next five years, the company is expected to maintain a growth rate of 16% every year. As per the consensus, the anticipated revenue for the current year and next year is expected to be $1.71 billion and $2.03 billion.
Conclusion
The forward P/E ratio of the company records to 14.38 and is quite impressive. This P/E ratio can leverage growth of the stocks and can provide good returns in future. Furthermore the EPS of 2.93 is again very lucrative for an investor, considering the declining interest rates.
The company has been displaying strong quarter results and this momentum can further continue, so I think it would be a wise decision to buy this stock
