Cirrus Logic (CRUS): Evaluating Valuation After GlobalFoundries Chip Technology Collaboration and U.S. Manufacturing Expansion

If you are looking for the next move on Cirrus Logic (CRUS), this week’s news may have caught your eye. The company just expanded its collaboration with GlobalFoundries, aiming to bring highly efficient and powerful chip technologies to market—from consumer gadgets to cars. This partnership goes beyond a routine announcement, as it promises fresh manufacturing capacity in the U.S. along with advances in critical chip technologies such as BCD process and Gallium Nitride, which could shape Cirrus Logic’s future product lineup.

So far, the market seems to be taking notice. Cirrus Logic shares have jumped 17% in the past month alone, with gains approaching 18% for the year to date. Even with a three-year return above 40%, the longer-term performance comes after a tougher 12 months, during which the stock is still down nearly 19%. Momentum appears to be building again, largely on hopes this alliance will help Cirrus Logic capture fresh demand and strengthen its position in supply chains that have been affected by recent industry disruptions.

With shares rebounding lately, some may wonder whether Cirrus Logic is trading at an attractive entry point or if investors have already factored in expectations for the company’s next phase of growth.

Most Popular Narrative: 4.8% Undervalued

According to community narrative, Cirrus Logic is currently considered undervalued relative to analyst fair value targets, even as profit growth may decelerate and margin pressures may persist over the next several years.

Cirrus Logic is expanding beyond its core smartphone audio business by increasing the value and breadth of its high-performance mixed signal solutions, particularly in areas such as camera controllers, battery and power management, and sensing. This strategic diversification positions the company to capture new revenue streams and reduce customer concentration risk. These efforts have the potential to drive higher revenue growth and bolster earnings stability over time.

What is the calculation behind this "undervalued" call? The narrative relies on an ambitious future profit multiple and growth that outpaces expectations for legacy products. Are these optimistic financial assumptions justified? The full story examines the complex math and projections behind this standout valuation.

Result: Fair Value of $123.33 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing reliance on a few key smartphone customers, as well as uncertain growth from new markets, could quickly challenge these bullish assumptions if conditions shift.

Find out about the key risks to this Cirrus Logic narrative.

Another View: What Does the SWS DCF Model Indicate?

A second look using our DCF model tells a very different story. The analysis suggests Cirrus Logic may actually be trading above its calculated intrinsic value. Could this method be pointing to potential risks that investors should not ignore?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Cirrus Logic for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Cirrus Logic Narrative

If you have a different perspective or want to dig deeper into the data, you can craft your own take in just a few minutes. do it your way.

A great starting point for your Cirrus Logic research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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