SiTime Corp (SITM, Financial) has recently experienced a notable daily loss of 5.89%, and a significant three-month decline of 21.79%. With a Loss Per Share of $2.81, investors are keen to understand if the current stock valuation is justified. Is SiTime fairly valued in the context of its recent performance and market volatility? The following analysis aims to shed light on this question by examining SiTime's intrinsic value and market position.
Company Introduction
SiTime Corp is a leading provider of silicon timing system solutions in the USA, catering to diverse sectors such as automotive, aerospace-defense, and the internet of things. Its product suite includes advanced oscillators and resonators, which play a critical role in electronic systems. Despite the recent downturn in share price to $101.95, SiTime's market cap stands at $2.30 billion, with sales reaching $162.40 million. The company's financial and operational metrics, including a GF Value of $104.04, paint a comprehensive picture of its current market status. This valuation serves as a benchmark for the fair market value of SiTime's shares.
Summarize GF Value
The GF Value is a proprietary measure that represents the intrinsic value of a stock, considering historical trading multiples, an adjustment factor based on the company's past performance, and future business prospects. SiTime (SITM, Financial) is currently assessed as fairly valued according to this metric. The GF Value, set at $104.04, aligns closely with the company's current stock price. This suggests that the stock price is in equilibrium with its intrinsic value, indicating that investors can expect a return on investment that mirrors the company's growth rate.
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Financial Strength
Investors must evaluate a company's financial strength to avoid the risk of capital loss. SiTime's financial stability is evident in its cash-to-debt ratio of 65.78, positioning it above 87.99% of its peers in the Semiconductors industry. This strong balance sheet earns SiTime a financial strength rank of 8 out of 10 from GuruFocus.
Profitability and Growth
Profitability is a critical indicator of a company's financial health. SiTime has maintained profitability for 3 out of the past 10 years, with a revenue of $162.40 million and a Loss Per Share of $2.81. However, the company's operating margin is currently -52.62%, which is lower than 93.13% of its industry counterparts. SiTime's growth has been robust, with an average annual revenue increase of 16.3%, outpacing 60.32% of its competitors. The 3-year average EBITDA growth rate is an impressive 57%, ranking better than 85.18% of companies in the Semiconductors industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) with its Weighted Average Cost of Capital (WACC) can reveal its efficiency in generating cash flow relative to its capital investments. SiTime's ROIC of -56.04 is currently below its WACC of 19.69, suggesting that the company is not creating value for shareholders as effectively as possible.
Conclusion
Overall, SiTime (SITM, Financial) appears to be fairly valued in the market. The company boasts a robust financial condition, despite its profitability challenges. SiTime's growth prospects remain promising, with a growth rank that outshines a significant portion of the industry. For a more detailed financial overview, interested parties can view SiTime's 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
