CIRRUS LOGIC INC (NASDAQ:CRUS), an undervalued stock with good fundamentals.

Our stock screener has spotted CIRRUS LOGIC INC (NASDAQ:CRUS) as an undervalued stock with solid fundamentals. CRUS shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

Analyzing Valuation Metrics

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of CRUS, the assigned 7 reflects its valuation:

• Based on the Price/Earnings ratio, CRUS is valued cheaply inside the industry as 87.04% of the companies are valued more expensively.
• CRUS's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 28.62.
• Compared to the rest of the industry, the Price/Forward Earnings ratio of CRUS indicates a rather cheap valuation: CRUS is cheaper than 87.96% of the companies listed in the same industry.
• The average S&P500 Price/Forward Earnings ratio is at 21.72. CRUS is valued slightly cheaper when compared to this.
• Based on the Enterprise Value to EBITDA ratio, CRUS is valued cheaper than 81.48% of the companies in the same industry.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of CRUS indicates a rather cheap valuation: CRUS is cheaper than 98.15% of the companies listed in the same industry.
• CRUS has a very decent profitability rating, which may justify a higher PE ratio.

Profitability Analysis for CRUS

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. CRUS was assigned a score of 7 for profitability:

• With an excellent Return On Assets value of 12.91%, CRUS belongs to the best of the industry, outperforming 81.48% of the companies in the same industry.
• The Return On Equity of CRUS (15.54%) is better than 76.85% of its industry peers.
• Looking at the Return On Invested Capital, with a value of 12.68%, CRUS belongs to the top of the industry, outperforming 82.41% of the companies in the same industry.
• Looking at the Profit Margin, with a value of 16.55%, CRUS is in the better half of the industry, outperforming 72.22% of the companies in the same industry.
• In the last couple of years the Profit Margin of CRUS has grown nicely.
• CRUS has a Operating Margin of 20.44%. This is in the better half of the industry: CRUS outperforms 77.78% of its industry peers.
• In the last couple of years the Operating Margin of CRUS has grown nicely.
• Looking at the Gross Margin, with a value of 52.18%, CRUS is in the better half of the industry, outperforming 69.44% of the companies in the same industry.

Understanding CRUS's Health

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of CRUS, the assigned 10 reflects its health status:

• CRUS has an Altman-Z score of 9.85. This indicates that CRUS is financially healthy and has little risk of bankruptcy at the moment.
• CRUS's Altman-Z score of 9.85 is amongst the best of the industry. CRUS outperforms 83.33% of its industry peers.
• CRUS has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
• CRUS has a Current Ratio of 5.93. This indicates that CRUS is financially healthy and has no problem in meeting its short term obligations.
• With an excellent Current ratio value of 5.93, CRUS belongs to the best of the industry, outperforming 84.26% of the companies in the same industry.
• CRUS has a Quick Ratio of 4.62. This indicates that CRUS is financially healthy and has no problem in meeting its short term obligations.
• CRUS has a better Quick ratio (4.62) than 82.41% of its industry peers.

Analyzing Growth Metrics

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. CRUS scores a 5 out of 10:

• CRUS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 13.38%, which is quite good.
• CRUS shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 20.11% yearly.
• Measured over the past years, CRUS shows a quite strong growth in Revenue. The Revenue has been growing by 8.58% on average per year.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

Our latest full fundamental report of CRUS contains the most current fundamental analsysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.