Is Lattice Semiconductor's (NASDAQ:LSCC) 195% Share Price Increase Well Justified?

It's been a soft week for Lattice Semiconductor Corporation (NASDAQ:LSCC) shares, which are down 11%. But that doesn't change the fact that the returns over the last five years have been very strong. In fact, the share price is 195% higher today. To some, the recent pullback wouldn't be surprising after such a fast rise. The more important question is whether the stock is too cheap or too expensive today.

See our latest analysis for Lattice Semiconductor

Given that Lattice Semiconductor only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

For the last half decade, Lattice Semiconductor can boast revenue growth at a rate of 1.2% per year. That's not a very high growth rate considering the bottom line. So we wouldn't have expected to see the share price to have lifted 24% for each year during that time, but that's what happened. While we wouldn't be overly concerned, it might be worth checking whether you think the fundamental business gains really justify the share price action. It may be that the market is pretty optimistic about Lattice Semiconductor.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think Lattice Semiconductor will earn in the future (free profit forecasts).

A Different Perspective

It's nice to see that Lattice Semiconductor shareholders have received a total shareholder return of 175% over the last year. That's better than the annualised return of 24% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Lattice Semiconductor better, we need to consider many other factors. Take risks, for example - Lattice Semiconductor has 3 warning signs we think you should be aware of.

Lattice Semiconductor is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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