Founded in 1986, Synaptics, Inc. (SYNA) is a developer of custom designed human interface products used in mobile computing, including mobile phones, notebook computers, PC peripherals, and portable entertainment devices such as MP3 players. A list of some of the company’s products, and its largest clients, are as follows: (Note: Click on the links to be taken to a description of the given product.)
- Mobile
- Tablets
- Peripheral
- PC
- Media Player
Material Event:
Synaptics shares surged over 8.0 percent yesterday, following news that the company raised its guidance for the quarter. According to a report issued by Investors Business Daily:
The San Jose, Calif.-based company late Tuesday said it expects to report sales of $227 million to $230 million for its fiscal fourth quarter ending Sunday. Its previous outlook was for sales of $190 million to $205 million. The midpoint of its new guidance would translate to sales growth of 66% year over year and 40% sequentially.
Synaptics also expects a Q4 gross profit margin of about 50%, above its prior outlook of 48% to 49%. The company is scheduled to report fiscal fourth-quarter results on Aug. 1.
Synaptics said the higher revenue was driven by better-than-expected sales of mobile products from multiple customers.
Fundamentals:
On an annual basis, Synaptics experienced revenue increases for four consecutive years (2008 to 2011) before suffering an 8.51 percent decline in revenues in 2012.
Technically:
From a technical standpoint, Synaptics stock price has enjoyed a nice ten year (albeit choppy) advance in price. At the same time, On Balance Volume has steadily increased along with the stock’s price, which supports the price movement.
From a statistical standpoint, however, Synaptics is in worse shape than its peers. Its Price to Sales and Price to Book metrics are higher than its peers; and its profitability metrics are weaker than its peers.
Conclusion:
Though I, personally, would not buy shares of Synaptics’ stock at these levels, this may be one to watch for a future investment. The company services a broad range of clients and, if the market for mobile devices is beginning to heat up, as some believe, Synaptics may be one of a handful of better ways to play this segment of the market. The stock’s current Short Squeeze Ratio now sits at 3.6 Days To Cover, which should provide some fuel for upward price movement should investors take more of an interest in the stock.
Note: Information for this article was collected from the company’s Web site, from FinViz.com, from Investor’s Business Daily, from Morningstar, and from Short Squeeze.com. Charting data provided courtesy of optionsXpress.
Disclosure: I own shares of SYNA, indirectly, through Vanguard’s Total Stock Market ETF (SYNA).
