Integrated Device Technology Inc (NASDAQ:IDTI) is one of those companies making the best of a growing market. Particularly, a report indicates that the industry is one of the fastest growing in the world. Specifically, there still a growing interest in the products from diverse industries.
The Integrated Device Technology balance sheet
Integrated Device Technology released its latest financial report last month. Interestingly, the report indicates strong performance riding on the wave of increasing demand for its products. In particular, the company reported a total of $224.6 million in revenues for Q4 2018. During the similar period last year, the company reported 28% less revenues.
With $1.338 billion in assets and $1337 billion in liabilities + shares, the company has a strong balance sheet. Particularly, this is possible for the reason that the company controls a very high level of unsold assets.
Furthermore, Integrated Device Technology’s short term assets are 1.2x debt. This way, the company has all debts covered which means it has more space to finance new projects.
However, the company has some challenges when it comes to the ratio of net worth to debt. Particularly, total debt is 40% more than net worth. Interestingly, total debt was 0% five years ago. In the recent financial report, total debt climbed to 77% relative to net worth.
Therefore, it is possible that the company is using up its assets pretty. In another sense, it could be possible that the company is borrowing heavily to finance new projects.
Value and the share price
The company is currently trading at $48 per share on NASDAQ. On the other hand, computing the share price in terms of future cash flow value gives $23.39, a lower value. In essence, this implies that the company is valued at almost twice its real value.
In another sense, the share price comes out again overvalued when compared to the company’s past earnings. Specifically, the price as at is 335.6x the actual price based on past earnings. Particularly, this indicates that the company is overvalued based on earnings as compared to the average of the US industry.
However, a comparison with the company’s expected growth brings up an interesting conclusion. In particular, the company has poor value based on expected growth for the next financial year.
Another interesting metric is the performance of the share price in relation to the 50-day and the 200-day moving averages. On the part of MA (50), the share price finds support at 46.92. Similarly, the MA (200) gives the support for the share price at 37.36.
Incidentally, the huge gap between the two moving averages is due to the fact that the share has initially performed poorly. For most of the months before September, the share price was submerged below $38. However, it suddenly jumped 21% to a little over $46 in mid September.
Source: StockCharts.com
Outlook
The semiconductor industry as whole is on an upward trajectory. In the same breath, Integrated Device Technology will certainly add some “meat” on its earnings.
Specifically, the company entered an agreement with Toshiba Memory Corporation to provide power management ICs (PMICs). This is a major deal considering the product range and customer base for Toshiba.
Sean Fan, senior vice president and general manager of IDT’s computing and communications group said of the partnership:
“We are thrilled to be collaborating with Toshiba Memory Corporation, a world leader in high-performance solid state drives and a flash memory powerhouse.”
Furthermore, the company is formally launching the proprietary wireless charging transmitter and receiver chipset. This is after Xiaomi Mobile agreed to integrate the chipset in its flagship MI MIX 2S smartphone.