tiprankstipranks
Qorvo Stock Has Both Value and Growth
Stock Analysis & Ideas

Qorvo Stock Has Both Value and Growth

Qorvo, Inc. (QRVO) engages in the provision of core technologies and radio frequency solutions for mobile, infrastructure, and aerospace or defense applications.

It operates through the following reportable segments: Mobile Products and Infrastructure & Defense Products. Its products include amplifiers, control products, discrete transistors, and integrated circuits, filters and duplexers, frequency converters, integrated modules, optical components, and more. The company was founded in 2013 and is headquartered in Greensboro, NC.

I am bullish on QRVO stock. The company has solid fundamentals, with a very positive free cash flow trend, and is now very attractive, even though it underperformed Nasdaq in 2021.

Qorvo Business News

Qorvo has “introduced three new wideband power amplifiers (PAs) that offer industry-leading performance over the full 1-40 GHz frequency range to support demanding requirements for electronic warfare, radar, and test equipment applications.”

The company has also been expanding into the Android mobile phones ecosystem by supplying Ultra-Wideband (UWB) technology for Google’s Pixel 6 Pro smartphone.

In mid-December 2021, QRVO announced that it completed its offering of $500 million principal amount worth of senior notes maturing in 2024.

In early November 2021, the QRVO acquired United Silicon Carbide (UnitedSiC). UnitedSic is “a leading manufacturer of silicon carbide (SiC) power semiconductors. The acquisition of United Silicon Carbide expands Qorvo’s reach into the fast-growing markets for electric vehicles (EVs), industrial power, circuit protection, renewables, and data center power. United Silicon Carbide will become part of Qorvo’s Infrastructure & Defense Products.”

Recent Financial Results: Beat on EPS and Revenue

QRVO’s normalized EPS of $3.42 and revenue of $1.26 billion beat by $0.17 and $4.38 million, respectively. QRVO stock earnings have been strong and rising as of Q2 2020.

Fiscal Q2 2022 ended on October 2, 2021. On a GAAP basis, compared to Q1 of Fiscal 2022 ended on July 3, 2021, gross margin was 49.5% vs. 49.2%, operating income was $362.4 million versus $297.1 million, and GAAP diluted EPS was $2.84 versus $2.51.

Fundamentals – Risks

QRVO stock has very strong fundamentals. The Piotroski F-Score is 9, indicating a very healthy situation. Qorvo’s operating margin is expanding. Furthermore, its price-to-book ratio of 3.7 is close to a one-year low of 3.45, and its P/E ratio of 15.6 is close to a 10-year low of 15.24.

Qorvo Inc’s stock price is close to a one-year low with a 52 week-range of $142.17 – $201.68 and a current stock price near $150.

The gross and net margins have been rising over the past years. Its net margin of 10.3% in Fiscal 2020 rose to 18.3% in Fiscal 2021. The gross margin of 42% in 2020 rose to 46.9% in 2021.   

On another important key metric, the number of weighted average diluted shares in Q2 of Fiscal 2022 was 112.4 million, which is less than 113.9 million in Q1 of Fiscal 2022.

Qorvo has been issuing new debt, as, during the past three years, it issued $953.4 million of debt. However, its debt level is acceptable with a debt/equity ratio of 0.37 per latest quarter.

Sales growth has been gaining momentum both on an annual basis and in the past two consecutive quarters. Free cash flow growth has been exceptional in the past two consecutive fiscal years, with a growth of 42.65% for 2021. However, in the first nine months of 2021, free cash flow growth has lost momentum, experiencing negative growth for three consecutive quarters.

Valuation

QRVO stock is attractive based on its P/E ratio of 15.6x compared to the US semiconductor industry average of 31x and based on its price-to-book ratio of 3.7x compared to the US semiconductor industry average 4.7x.

Wall Street’s Take

Turning to Wall Street, Qorvo has a Moderate Buy consensus based on six Buys and nine Holds. The average Qorvo price target of $197.08 implies 30.6% upside potential. 

QRVO stock has underperformed in 2021, but in 2022 it may outperform based on an attractive valuation and very strong fundamentals. Profitability is very strong, and there is a lot of growth too.

Download the TipRanks mobile app now

Read full Disclaimer & Disclosure

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles