Winbond Electronics Corp. : Neutral outlook but great fundamentals

Winbond Electronics Corp. relative valuation is now NEUTRAL. It was previously rated UNDERVALUED, and has a fundamental analysis score of 63.

Our analysis is based on comparing Winbond Electronics Corp. with the following peers – GSI Technology, Inc., Micron Technology, Inc., ON Semiconductor Corporation, Rambus Inc., MoSys, Inc. and Micromem Technologies Inc. (GSIT-US, MU-US, ON-US, RMBS-US, MOSY-US and MMTIF-US).

Relative Valuation

Winbond Electronics Corp. is currently neutrally valued, as its previous close of USD 6.04 lies within the CapitalCube estimate range of USD 5.62 to USD 8.07. Over the last 52 week period, Winbond Electronics Corp. has fluctuated between USD 2.99 and USD 6.49.

Relative Valuation

Company Overview

  • Considering peers, relative outperformance over the last year and the last month suggest a leading position.
  • It’s current Price/Book of 1.42 is about median in its peer group.
  • WBEMF-US‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • WBEMF-US has a successful operating model with relatively high net profit margins and asset turns.
  • Changes in the company’s annual revenue and earnings are around the median among its peers.
  • Over the last five years, WBEMF-US‘s return on assets has improved from median to better than the median among its peers, suggesting the company has found relative operating advantages.
  • The company’s median gross margin and relatively high pre-tax margins suggest non-differentiated product portfolio but with tight cost control relative to peers.
  • While WBEMF-US‘s revenues growth has been below the peer median in the last few years, the market still gives the stock a P/E ratio that is around peer median and seems to see the company as a long-term strategic bet.
  • The company’s capital investment seems appropriate for a business with peer median returns.
  • WBEMF-US has additional debt capacity.

Investment Outlook

Winbond Electronics Corp. has a fundamental score of 63 and has a relative valuation of NEUTRAL.

Winbond Electronics Corp. is on the top left quadrant of the CapitalCube Value – Price Matrix. We classify this space a ‘Value Play’. Here, Winbond Electronics Corp. is potentially undervalued, since it trades below its CapitalCube Implied Price of 6.85. At the same time, Winbond Electronics Corp. is also fundamentally strong with a score of 63. This is a classic value stock definition.

Fundamentals Vs Relative Valuation

Quadrant label definitions. Hover to know more

Safety, Value Play, Value Trap, Speculative

Drivers of Valuation

The market seems to expect WBEMF-US to maintain its relatively high returns.

WBEMF-US‘s operating performance is higher than the median of its chosen peers (ROE of 7.20% compared to the peer median ROE of 4.20%) but the market does not seem to expect higher growth relative to peers (P/E of 21.29 compared to peer median of 22.41) but simply to maintain its relatively high rates of return.

The company’s current Price/Book of 1.42 is about median in its peer group.

Valuation Drivers

Quadrant label definitions. Hover to know more

Outperforming, Harvesting, Challenged, Turnaround

WBEMF-US has moved to a relatively high ROE from an Harvesting profile at the recent year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

Winbond Electronics Corp. engages in the manufacturing and selling of integrated circuits and related products. It operates through the following business segments: DRAM IC, Flash Memory, and Logic IC Products. The DRAM IC Product segment deals with the manufacturing, selling, researching, designing, and the after-sales service of Mobile RAM, Specialty RAM, Graphic RAM, and Commodity RAM. The Flash Memory Product segment handles the production, sales, research, design, and after-sales service of the Flash Memory product. The Logic IC Product segment engages with the fabrication, examination, outlining, disposal, and after-sales service of the Logic IC product. The company was founded on September 29, 1987 and is headquartered in Taichung, Taiwan.

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