Earnings Previews of Two Acquirers: Semtech Corporation (SMTC) and PVH Corp (PVH)

Page 1 of 2

Semtech Corporation (NASDAQ:SMTC)’s buyout of Canadian firm Gennum last March had an immediate impact on its earnings. Despite the positive effect, the semiconductor maker’s profits probably slumped in its fiscal 2013 (ended in January). Still, Semtech is a resilient company, and the next 12 months look to be better in terms of bottom-line comparisons.

Semtech Corporation (NASDAQ:SMTC)

Elsewhere, apparel producer PVH Corp (NYSE:PVH) recently closed the purchase of fellow manufacturer the Warnaco Group. The shares were boosted by news of the deal back in October, but haven’t moved much since then. Share net is apt to trend favorably, barring setbacks.

Here are the company descriptions and forecasts:

Semtech Corporation (NASDAQ:SMTC)

The analog and mixed-signal semiconductor maker spends 20% to 25% of revenues on research and development, resulting in a high proportion of proprietary offerings and wide gross margins. The communications and high-end consumer markets are its two largest customer contingencies, with Industrial/Other and Enterprise Computing rounding out the segments. Its goal is 60% gross (product) margins, one that it achieved in the October 2012 quarter.

Semtech lists as its biggest client Samsung, who it supplies with handheld-related components. Huawei, its second-largest customer, is also in the communications industry. Accordingly, further market share gains by either of these companies would have positive ramifications.

January-quarter earnings were likely about $0.34 a share, up from $0.23 in the previous year. The addition of Gennum expands Semtech’s presence in high-growth markets, particularly broadcast video. It also makes products for the transition of analog cctv to full digital HD and is investing in consumer, backplane (for bandwidth increases) and video platform product development.

In all, R&D and acquisitions have left Semtech positioned for growth over an extended term. The shares have consequently reached a ten-year high, but may well be poised to climb further, particularly over three to five years.

PVH Corp (NYSE:PVH)

Formerly Phillips-Van Heusen, PVH is a recent addition to the S&P 500. The February purchase of Warnaco brought together all Calvin Klein assets under one roof. PVH, currently experiencing revenue increases at its Tommy Hilfiger brand, seems to be aiming to alleviate slowdowns at other divisions. It is touting the acquisition as creating a global powerhouse, bringing Warnaco’s Asia and Latin America business together with its own North America and Europe-based units.

Share earnings could well have advanced about 27% in the January interim. And, PVH is likely to post solidly higher results in 2013, with revenue and earnings buoyed by merger synergies. Profitability should be relatively stable, as opposed to some fashion entities, in light of PVH’s large and diverse set of brands, also including IZOD, ARROW, Bass, and Speedo etc. It is similar to V.F. Corporation (NYSE:VFC), another apparel conglomerate; the difference is that V.F.’s brands, like Nautica, Timberland, and North Face are mostly outdoor focused. VFC shares have long-term appeal at the current quote.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!