Investment Thesis
Cirrus Logic demonstrates exceptional financial quality with 20.7% net margins, 31.9% free cash flow margins, and fortress-like balance sheet (7.37x current ratio, zero debt). Net income growth of 25% YoY significantly outpaces 5.3% revenue growth, indicating strong operational leverage and margin expansion despite modest topline growth.
Strengths
- Exceptional profitability: 52.8% gross margin and 20.7% net margin are outstanding for semiconductors
- Outstanding cash generation: 31.9% FCF margin with minimal CapEx requirements ($14M on $2B revenue)
- Fortress balance sheet: $800.9M cash, zero debt, 7.37x current ratio, and 19.5% ROE demonstrate efficient capital deployment
- Earnings momentum outpacing revenue: 25% net income growth and 30.8% EPS growth on 5.3% revenue growth shows operational leverage
- Strong balance sheet provides optionality: Zero debt and 32% of assets in cash enables acquisitions, R&D investment, or shareholder returns
Risks
- Modest revenue growth of 5.3% is below semiconductor industry expectations and may indicate market share loss or product concentration risk
- Cyclical semiconductor exposure: Subject to industry downturns and customer inventory fluctuations
- Margin sustainability uncertain: 25% net income growth significantly exceeding 5.3% revenue growth may not be sustainable without revenue acceleration
Key Metrics to Watch
- Revenue growth acceleration: Monitor if 5.3% growth inflects higher in coming quarters
- Gross margin stability: Watch for margin compression if pricing pressures or product mix shifts occur
- Free cash flow consistency: Ensure high FCF conversion rates sustain at 30%+ levels
- Customer concentration and order book trends: Critical for forecasting revenue sustainability
Financial Metrics
Revenue
2.0B
Net Income
414.4M
EPS (Diluted)
$7.85
Free Cash Flow
636.6M
Total Assets
2.5B
Cash
800.9M
Profitability Ratios
Gross Margin
52.8%
Operating Margin
23.0%
Net Margin
20.7%
ROE
19.5%
ROA
16.6%
FCF Margin
31.9%
Balance Sheet & Liquidity
Current Ratio
7.37x
Quick Ratio
6.13x
Debt/Equity
0.00x
Debt/Assets
0.0%
Interest Coverage
503.15x
Long-term Debt
N/A
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-22T06:47:04.740715 |
Data as of: 2026-03-28 |
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