The shareholders of this tech company have just approved its “merger of equals” with TriQuint Semiconductor, Inc. (TQNT). The deal is estimated to close in the second half of this year.
RF Micro Devices Inc. (RFMD)
from Ford Equity Research Report
RF Micro Devices (RFMD) designs, develops, manufactures and markets radio frequency solutions to domestic and international original equipment manufacturers and original design manufacturers in wireless and wired communications applications. The company provides a line of products that range from single-function components to integrated circuits such as gain blocks, power amplifiers, switches, antenna tuners, receivers, transmitters, transceivers, modulators, demodulators, and frequency synthesizers; and multi-chip modules that include switch filter modules, switch duplexer modules, phase-locked loops, coaxial resonator oscillators, variable gain amplifiers, hybrid amplifiers, and power doublers.
Ford’s Strong Buy recommendation on RF Micro Devices Inc. is the result of our systematic analysis on three basic characteristics: earnings strength, relative valuation, and recent stock price movement. The company has enjoyed a very positive trend in earnings per share over the past 5 quarters and while recent estimates for the company have been raised by analysts, RFMD has posted better than expected results. Based on operating earnings yield, the company is undervalued when compared to all of the companies we cover. Share price changes over the past year indicate that RFMD will perform very well over the near term.
While RF Micro Devices Inc.'s earnings have increased from $0.13 to an estimated $0.65 over the past 5 quarters, they have shown strong acceleration in quarterly growth rates when adjusted for the volatility of earnings.
Earnings forecasts for RF Micro Devices Inc. have been increasing, which indicates an improvement in future earnings growth. The company has also reported higher earnings than those predicted in earlier estimates.
RF Micro Devices Inc.'s operating earnings yield of 5.2% ranks above 64% of the other companies in the Ford universe of stocks, indicating that it is undervalued.
RF Micro Devices Inc.'s stock price is up 151.4% in the last 12 months, up 32.5% in the past quarter and up 11.7% in the past month. This historical performance should lead to above average price performance in the next one to three months.
We project that RFMD will strongly outperform the market over the next 6 to 12 months. This projection is based on our analysis of three key factors that influence common stock performance: earnings strength, relative valuation, and recent price movement.
Richard Segarra, CFA, Ford Equity Research Report, www.fordequity.com, 800-842-0207, August 29, 2014