Value
5.0/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 2.2 |
| P/S | 4.1 |
| Fwd P/E | 4.5 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 27.6x
- ▸PEG: 0.12
SIMO · Why this verdict
Why Silicon Motion Technology Corpo (SIMO) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score6.2/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Silicon Motion Technology delivered 106% year-over-year revenue growth and has beaten earnings estimates in 3 of the last 4 quarters with an average positive surprise of 31%, but the stock trades above the analyst consensus target with negative asymmetry and a free cash flow red flag that warrants caution before adding exposure.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Silicon Motion achieved 106% year-over-year revenue growth, positioning it as a top-ranked growth performer among semiconductor peers and reflecting strong demand for its NAND flash controller chips across storage markets. Growth breakdown | Revenue growth remains above 40% year-over-year for at least 2 of the next 4 reported quarters, demonstrating sustained above-market demand. | →Stable |
| CounterTriple-digit revenue growth often reflects a base-period comparison effect following a prior-year downcycle; growth rates at these levels are nearly impossible to sustain and will decelerate sharply. | ||
Silicon Motion has beaten earnings per share estimates in 3 of the last 4 quarters with an average positive surprise of 31%, including a significant beat of 80% in the most recent quarter, demonstrating management's ability to execute above expectations. Earnings | Earnings beats continue in at least 3 of the next 4 quarters with average positive surprise above 15%. | →Stable |
| CounterThe earnings beat pattern in semiconductor companies often coincides with up-cycles; the one miss in the streak and cyclical industry dynamics could see the beat rate revert at a cycle turn. | ||
Despite strong reported net income, Silicon Motion's free cash flow is negative 74% relative to net income, a red flag indicating that accounting earnings significantly overstate cash generation, which reduces the quality of the earnings beat narrative. Quality breakdown | Free cash flow as a percentage of net income improves to above positive 30% within the next four quarters, indicating the cash conversion gap is closing. | →Stable |
| CounterNegative free cash flow relative to net income in a high-growth semiconductor company often reflects heavy working capital investment or capital expenditures that are growth-enabling rather than a warning sign. | ||
With the stock at $276.40 trading above the analyst consensus implied level and showing negative 19.2% to the analyst target plus negative asymmetry ratio of negative 1.3, the stock is priced beyond where analysts believe it is worth on a 12-month horizon. Warnings | Analyst price targets rise to at least $320, more than 16% above current price, driven by upward earnings revisions before the stock can be considered attractively priced relative to consensus. | ↓Deteriorating |
| CounterThe resistance-based take-profit of $308.05 suggests a technical pathway to further gains even if analyst targets are not raised, through momentum-driven price discovery. | ||
Silicon Motion achieved 106% year-over-year revenue growth, positioning it as a top-ranked growth performer among semiconductor peers and reflecting strong demand for its NAND flash controller chips across storage markets.
→StableGrowth breakdown
- Expectation
- Revenue growth remains above 40% year-over-year for at least 2 of the next 4 reported quarters, demonstrating sustained above-market demand.
CounterTriple-digit revenue growth often reflects a base-period comparison effect following a prior-year downcycle; growth rates at these levels are nearly impossible to sustain and will decelerate sharply.
Silicon Motion has beaten earnings per share estimates in 3 of the last 4 quarters with an average positive surprise of 31%, including a significant beat of 80% in the most recent quarter, demonstrating management's ability to execute above expectations.
→StableEarnings
- Expectation
- Earnings beats continue in at least 3 of the next 4 quarters with average positive surprise above 15%.
CounterThe earnings beat pattern in semiconductor companies often coincides with up-cycles; the one miss in the streak and cyclical industry dynamics could see the beat rate revert at a cycle turn.
Despite strong reported net income, Silicon Motion's free cash flow is negative 74% relative to net income, a red flag indicating that accounting earnings significantly overstate cash generation, which reduces the quality of the earnings beat narrative.
→StableQuality breakdown
- Expectation
- Free cash flow as a percentage of net income improves to above positive 30% within the next four quarters, indicating the cash conversion gap is closing.
CounterNegative free cash flow relative to net income in a high-growth semiconductor company often reflects heavy working capital investment or capital expenditures that are growth-enabling rather than a warning sign.
With the stock at $276.40 trading above the analyst consensus implied level and showing negative 19.2% to the analyst target plus negative asymmetry ratio of negative 1.3, the stock is priced beyond where analysts believe it is worth on a 12-month horizon.
↓DeterioratingWarnings
- Expectation
- Analyst price targets rise to at least $320, more than 16% above current price, driven by upward earnings revisions before the stock can be considered attractively priced relative to consensus.
CounterThe resistance-based take-profit of $308.05 suggests a technical pathway to further gains even if analyst targets are not raised, through momentum-driven price discovery.
Per-dimension breakdown
Quality
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.8 |
| ROA | 4.9 |
| Gross margin | 5.6 |
| Op margin | 6.1 |
| Net margin | 8.0 |
| Current ratio | 9.6 |
| FCF quality | 0.0 |
| Moat | 7.2 |
| Piotroski F | 6.7 |
- ▸Strong margins: 16%
- ▸Earnings quality RED FLAG: -74% FCF/NI
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 106% YoY
Momentum
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 2.6 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 8.2 |
| Price target | 5.5 |
| erm sentiment | 4.9 |
- ▸Light analyst coverage (10.0) — signal dampened
Insider
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 6.3 |
| notable moves | 5.0 |
- ▸Modest insider selling — $1,927,070 (0.020% of mkt cap)
Peer rank
6.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.6 |
| quality rank | 6.7 |
| growth rank | 8.9 |
- ▸Industry growth leader
Technical
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.5 |
| support resistance | 5.9 |
| 52w position | 6.2 |
| gap | 6.0 |
Risk (lower is worse)
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.7 |
| days to cover | 10.0 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 4.4 |
- ▸High IV: 129%
- ▸Above max pain $140
Catalyst
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 4.3 |
- ▸Strong earnings: 3B/1M
- ▸Earnings in 6 days
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (5)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:4.4<4.5
- ASYMMETRY:-0.7=NEGATIVE
- EARNINGS_PROXIMITY:6d<=7d
Warning (0)
none
Reward-to-Risk
-0.65
Upside
-9.8%
Downside
15.0%
Sizing output
AVOID
SetupRange Bound — RSI 47 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.69>1.3
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: INSIDER:OK. Top dim: Growth at 10.0; weakest: Momentum at 4.4. No conviction either direction.
The strongest dimensions are Growth at 10.0, Peer rank at 6.5, and Sentiment at 6.4; the weakest are Momentum at 4.4, Insider at 4.5, and Value at 5.0. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of -0.65 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Revenue Growth Rate
Trip ifRevenue growth falls below 20% year-over-year in any single reported quarter, indicating the base-effect tailwind is dissipating faster than expected.
- P2Consistent Earnings Delivery
Trip ifEPS surprise falls below negative 15% in at least 2 of the next 4 quarters, breaking the established earnings delivery pattern.
- P3Free Cash Flow Quality Concern
Trip ifFree cash flow as a percentage of net income remains below negative 50% for two consecutive quarters, confirming the cash conversion gap is not improving.
- P4Analyst Target Exceeded Negative Asymmetry
Trip ifStock price rises above $310, more than 12% above current levels of $276.40, without a corresponding analyst price target upgrade, worsening negative asymmetry further.