Why Silicon Labs' Shares Processed Big Gains

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of analog-focused chipmaker Silicon Laboratories (NAS: SLAB) were up more than 12% today after beating expectations on top and bottom lines, despite a year-over-year decline in net income. The company also offered guidance for the upcoming quarter above analysts' consensus, though no net income projections were forthcoming.

So what: Silicon Labs closed the third quarter with $149.4 million in revenue and $0.61 in EPS. The EPS beat was significant, despite the fact that total net income fell to $10 million from $11.2 million in the year-ago quarter, as analysts had expected only $0.52 per share in EPS. Upcoming revenue guidance of $145 million to $150 million for the fourth quarter also beats the consensus expectation of $142.3 million.

Now what: Silicon Labs hasn't had a particularly strong past few years, and it remains to be seen whether this performance indicates good things to come or simply a surmounting of rather low expectations. The company's stock price isn't mouthwateringly cheap at a nearly 30 P/E, so I'd find it hard to call this an ideal entry point without more consistently good news to support a growth trend.

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The article Why Silicon Labs' Shares Processed Big Gains originally appeared on Fool.com.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter, @TMFBiggles, for more news and insights. Motley Fool newsletter services have recommended buying shares of Silicon Laboratories. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.

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