Samsung (XKRX:005930)’s stock rose solidly in the third quarter as the company produced strong earnings growth in its semiconductor businesses and successfully relaunched the Note phone. It is remarkable that, just one year ago the company was in the middle of a full-blown public relations crisis due to exploding batteries in the Note 7 and many were wondering if Samsung’s brand would be permanently damaged by the bad press.
In the last year, Samsung has transformed due to significant success in its semiconductor businesses. While the stock has appreciated significantly, its earnings have also increased substantially. We expect this year’s earnings will be more than double the profits that Samsung produced just two years ago in 2015. The stock remains inexpensive, selling for about 5X earnings after adjusting for the excess cash that Samsung maintains.
From Yacktman Fund (Trades, Portfolio)'s third-quarter 2017 shareholder commentary.
