| Snowflake Score | |
|---|---|
| Valuation | 0/6 |
| Future Growth | 5/6 |
| Past Performance | 0/6 |
| Financial Health | 4/6 |
| Dividends | 0/6 |
WOLF Stock Overview
Wolfspeed, Inc. provides silicon carbide and gallium nitride (GaN) materials, power devices, and radio frequency (RF) devices based on wide bandgap semiconductor materials and silicon.
Wolfspeed Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$112.94 |
| 52 Week High | US$142.33 |
| 52 Week Low | US$58.07 |
| Beta | 1.73 |
| 1 Month Change | 46.35% |
| 3 Month Change | 65.26% |
| 1 Year Change | 41.74% |
| 3 Year Change | 136.28% |
| 5 Year Change | 383.48% |
| Change since IPO | 9,166.87% |
Recent News & Updates
Wolfspeed Q4 2022 Earnings Preview
Wolfspeed (NYSE:WOLF) is scheduled to announce Q4 earnings results on Wednesday, August 17th, after market close. The consensus EPS Estimate is -$0.10 (+56.5% Y/Y) and the consensus Revenue Estimate is $207.58M (+42.4% Y/Y). Over the last 2 years, WOLF has beaten EPS estimates 100% of the time and has beaten revenue estimates 88% of the time. Over the last 3 months, EPS estimates have seen 1 upward revision and 1 downward. Revenue estimates have seen 2 upward revisions and 0 downward.
Wolfspeed: A Potential Deflation Enabler But Comes With Risks
Wolfspeed plays a key role in the Silicon Carbide supply chain, both as a device and substrate supplier. This technology allows for more compact and energy-efficient electronic circuitry in EVs, which are appealing in an economic environment where inflation is leading to higher costs. In view of the high capital expenses being made, it is also important to assess how funding is being obtained, as well as analyze profitability. The company is getting subsidies, takes upfront payments from customers, and expects non-GAAP gross margins to reach 50% by 2024. There are downside risks due to China's lockdowns leading to a potential revenue shortfall when fourth-quarter results are announced in the first week of August. Analysts at Morgan Stanley (MS) unveiled a list of stocks on July 12 that, according to them, could act as "Deflation Enablers", or those which can produce real cost savings for their clients. This has become crucial in a period where the costs of doing business are rising as a result of high wage inflation, supply chain-induced scarcity, and escalating energy costs. The list includes Wolfspeed (WOLF), a $9.4 billion semiconductor company whose shares trade at around $76 after a 35% fall since the beginning of this year, with part of the downside occurring after May 4, just after the company announced its third quarter 2022 financial results. Data by YCharts The aim of this thesis is to assess how the company can deliver products that can prove effective at addressing high inflation concerns, while at the same time profit from more demand. For this purpose, I focus on capital expenses, profitability, and debt metrics, but, first, it is important to identify how Wolfspeed achieves product differentiation. Wolfspeed's SiC Differentiator Wolfspeed previously known as Cree develops semiconductors based on silicon carbide ("SiC") and gallium nitride, materials that are used in electronic circuits ranging from power supplies, and wireless systems to transportation. More precisely, it has started to play a key role in the transition of America's auto industry from ICE (internal combustion engines) to EVs (electrified vehicles) as its chips enable the conception of more energy-efficient car powertrains, which can increase vehicle range by 5%-10%. In April this year, the company opened the world's largest and only Silicon Carbide 200 mm Wafer fab in New York. Mohawk Fab (www.wolfspeed.com) Now, the transition from 150mm to 200 mm SiC wafers marks an important step to optimizing production capacities in the automotive and industrial sectors as it makes it possible to manufacture more compact, lighter, and efficient components. This means that SiC comes with a lower total cost of ownership than normal silicon for Wolfspeed's customers many of whom are automakers, but it also supplies STMicroelectronics (STM) with substrates (materials). In addition to STM, the U.S. company established long-term wafer supply agreements with other manufacturers like Infineon Technologies (OTCQX:IFNNY) and ON Semiconductor (ON) and has emerged as a key player in driving the industrial shift from silicon to SiC with around 60% of global production capacity. For this purpose, its Durham facility and the North Carolina fab allow it to supply materials and devices (chips) respectively. The competition and Capital Expenses Now, compared to Silicon, SiC-based chips are more complicated to manufacture as it requires special furnaces and Wolfspeed with its 30 years of experience is well ahead of its competitors in this niche market. For investors, STM, Infineon (IFNNY), and Onsemi are in a way, Wolfspeed's competitors, but they still procure substrate (material) from the latter as these are required by their manufacturing operations. They must satisfy demand from automotive and industrial customers as new generation intelligent cars and consumer electronics require more chips. The fact that competitors have to source material from Wolfspeed provides evidence of high demand and tight supply in what has been described as a "multi-decade growth opportunity for SiC-based applications". However, this remains a highly dynamic industry and Wolfspeed now faces competition from Qorvo (QRVO) after the latter acquired United Silicon Carbide in November last year. At the same time, STM is looking to build internal capacity through the construction of a substrate factory. This should satisfy up to 40% of its total requirements by 2024. Consequently, Wolfspeed may have a competitive edge currently, but, things can change if it cannot recoup investments, especially in a rapidly changing landscape where different countries including Japan are aiming to lead the world in SiC. In this respect, its capital expenses are about the same as quarterly sales as shown in the chart below. This is in sharp contrast with peers whose revenues are at least four times the amount Capex spent. Comparison of revenues and Capex (ycharts.com) Moreover, the initial setup costs for the new Mohawk Valley wafer fab cost were approximately $21 million and should increase to about $75 million level by the end of the fiscal year 2022 which ends in June. Additionally, the net capital expenditures of $550 million for the entire fiscal year, are already up by $75 million over the initial amount forecasted. On further verification, I found that the New York fab benefited from $500 million worth of state support. Second, customers have to make an upfront deposit proportional to the amount invested by Wolfspeed in the production. On a further positive note, the company should also benefit from funding from the CHIPS Act which is in the process of being enacted into law. Therefore, the company is benefiting from state-level subsidies and customers are underwriting part of the investment, which are two important positives in the funding strategy. However, it is also important to identify downside risks. The Risks Looking at revenues, the company generated $188 million, which despite constituting a 36.9% Y-o-Y increase, missed analysts' expectations by $33 million after suffering from the adverse impact of China's COVID lockdowns. These caused shipping delays and partial shutdowns of Wolfspeed's semiconductor packaging subcontractors in that country. Now, due to lockdowns lasting approximately two months from April to May, the company could find it difficult to achieve the $200M to $215M revenues planned for the Q4 which lasts from April to June. The current quarter should therefore bear the brunt of supply chain issues which can either result in a revenue shortfall or reduced gross margins as a result of expedited shipping. Thus, the stock could again be volatile when results are announced in the first week of August. As for profitability, non-GAAP gross margins of 36.3% for Q3 represented a progression of 0.9% over Q2, in turn, made possible by some modest improvement in the product mix. For Q4, the gross margin should most likely be at the lower end of the expected 35.3% to 37.3% range due to prolonged lockdowns. Also, expect higher operating expenses as the company ramps up capacity and negative FCF due to capital expenses exceeding cash generated from operations. This was the case in the last reported quarter when free cash flow was -$131 million, and in a stock market where companies that do not generate cash are punished, do not exclude temporary downside risks.
Shareholder Returns
| WOLF | US Semiconductor | US Market | |
|---|---|---|---|
| 7D | 32.4% | 2.4% | 1.4% |
| 1Y | 41.7% | -3.2% | -8.4% |
Return vs Industry: WOLF exceeded the US Semiconductor industry which returned -4.2% over the past year.
Return vs Market: WOLF exceeded the US Market which returned -9% over the past year.
Price Volatility
| WOLF volatility | |
|---|---|
| WOLF Average Weekly Movement | 9.7% |
| Semiconductor Industry Average Movement | 8.6% |
| Market Average Movement | 7.6% |
| 10% most volatile stocks in US Market | 17.1% |
| 10% least volatile stocks in US Market | 3.1% |
Stable Share Price: WOLF is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 10% a week.
Volatility Over Time: WOLF's weekly volatility (10%) has been stable over the past year.
About the Company
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 1987 | 3,466 | Gregg Lowe | https://www.wolfspeed.com |
Wolfspeed, Inc. provides silicon carbide and gallium nitride (GaN) materials, power devices, and radio frequency (RF) devices based on wide bandgap semiconductor materials and silicon. The company’s silicon carbide and GaN materials comprise silicon carbide bare wafers, epitaxial wafers, and GaN epitaxial layers on silicon carbide wafers. It offers silicon carbide materials for customers to manufacture products for RF, power, and other applications.
Wolfspeed Fundamentals Summary
| WOLF fundamental statistics | |
|---|---|
| Market Cap | US$13.96b |
| Earnings (TTM) | -US$295.10m |
| Revenue (TTM) | US$746.20m |
18.7x
P/S Ratio-47.3x
P/E RatioIs WOLF overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| WOLF income statement (TTM) | |
|---|---|
| Revenue | US$746.20m |
| Cost of Revenue | US$496.90m |
| Gross Profit | US$249.30m |
| Other Expenses | US$544.40m |
| Earnings | -US$295.10m |
Last Reported Earnings
Jun 26, 2022
Next Earnings Date
n/a
| Earnings per share (EPS) | -2.39 |
| Gross Margin | 33.41% |
| Net Profit Margin | -39.55% |
| Debt/Equity Ratio | 41.9% |
How did WOLF perform over the long term?
See historical performance and comparisonValuation
Is WOLF undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score
0/6Valuation Score 0/6
Price-To-Sales vs Peers
Price-To-Sales vs Industry
Price-To-Sales vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast
Key Valuation Metric
Which metric is best to use when looking at relative valuation for WOLF?
Other financial metrics that can be useful for relative valuation.
| What is WOLF's n/a Ratio? | |
|---|---|
| n/a Ratio | 0x |
| n/a | n/a |
| Market Cap | US$13.96b |
| Key Statistics | |
|---|---|
| Enterprise Value/Revenue | 18.5x |
| Enterprise Value/EBITDA | -116.6x |
| PEG Ratio | n/a |
Price to Sales Ratio vs Peers
How does WOLF's PS Ratio compare to its peers?
| WOLF PS Ratio vs Peers |
|---|
| Company | PS | Estimated Growth | Market Cap |
|---|---|---|---|
| Peer Average | 6.3x | ||
FSLR First Solar | 5.1x | 18.0% | US$12.6b |
QRVO Qorvo | 2.4x | 8.9% | US$11.0b |
LSCC Lattice Semiconductor | 14.6x | 13.6% | US$8.5b |
SYNA Synaptics | 3.3x | 5.4% | US$5.7b |
WOLF Wolfspeed | 18.7x | 22.5% | US$14.0b |
Price-To-Sales vs Peers: WOLF is expensive based on its Price-To-Sales Ratio (18.7x) compared to the peer average (6.3x).
Price to Earnings Ratio vs Industry
How does WOLF's PE Ratio compare vs other companies in the US Semiconductor Industry?
Price-To-Sales vs Industry: WOLF is expensive based on its Price-To-Sales Ratio (18.7x) compared to the US Semiconductor industry average (3.9x)
Price to Sales Ratio vs Fair Ratio
What is WOLF's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
| Fair Ratio | |
|---|---|
| Current PS Ratio | 18.7x |
| Fair PS Ratio | 5.6x |
Price-To-Sales vs Fair Ratio: WOLF is expensive based on its Price-To-Sales Ratio (18.7x) compared to the estimated Fair Price-To-Sales Ratio (5.6x).
Share Price vs Fair Value
What is the Fair Price of WOLF when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: WOLF ($112.94) is trading above our estimate of fair value ($21.11)
Significantly Below Fair Value: WOLF is trading above our estimate of fair value.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is lower than the current share price.
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Future Growth
How is Wolfspeed forecast to perform in the next 1 to 3 years based on estimates from 16 analysts?
Future Growth Score
5/6Future Growth Score 5/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE
79.0%
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: WOLF is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.9%).
Earnings vs Market: WOLF is forecast to become profitable over the next 3 years, which is considered above average market growth.
High Growth Earnings: WOLF is expected to become profitable in the next 3 years.
Revenue vs Market: WOLF's revenue (22.5% per year) is forecast to grow faster than the US market (7.8% per year).
High Growth Revenue: WOLF's revenue (22.5% per year) is forecast to grow faster than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: WOLF's Return on Equity is forecast to be low in 3 years time (12.5%).
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Past Performance
How has Wolfspeed performed over the past 5 years?
Past Performance Score
0/6Past Performance Score 0/6
Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE
-42.1%
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: WOLF is currently unprofitable.
Growing Profit Margin: WOLF is currently unprofitable.
Past Earnings Growth Analysis
Earnings Trend: WOLF is unprofitable, and losses have increased over the past 5 years at a rate of 42.1% per year.
Accelerating Growth: Unable to compare WOLF's earnings growth over the past year to its 5-year average as it is currently unprofitable
Earnings vs Industry: WOLF is unprofitable, making it difficult to compare its past year earnings growth to the Semiconductor industry (56.1%).
Return on Equity
High ROE: WOLF has a negative Return on Equity (-12.1%), as it is currently unprofitable.
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Financial Health
How is Wolfspeed's financial position?
Financial Health Score
4/6Financial Health Score 4/6
Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Stable Cash Runway
Forecast Cash Runway
Financial Position Analysis
Short Term Liabilities: WOLF's short term assets ($1.8B) exceed its short term liabilities ($388.5M).
Long Term Liabilities: WOLF's short term assets ($1.8B) exceed its long term liabilities ($1.1B).
Debt to Equity History and Analysis
Debt Level: WOLF has more cash than its total debt.
Reducing Debt: WOLF's debt to equity ratio has increased from 6.5% to 41.9% over the past 5 years.
Balance Sheet
Cash Runway Analysis
For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.
Stable Cash Runway: WOLF has sufficient cash runway for more than a year based on its current free cash flow.
Forecast Cash Runway: Insufficient data to determine if WOLF has enough cash runway if its free cash flow continues to grow or shrink based on historical rates.
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Dividend
What is Wolfspeed current dividend yield, its reliability and sustainability?
Dividend Score
0/6Dividend Score 0/6
Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage
Dividend Yield vs Market
Notable Dividend: Unable to evaluate WOLF's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.
High Dividend: Unable to evaluate WOLF's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.
Stability and Growth of Payments
Stable Dividend: Insufficient data to determine if WOLF's dividends per share have been stable in the past.
Growing Dividend: Insufficient data to determine if WOLF's dividend payments have been increasing.
Earnings Payout to Shareholders
Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: Unable to calculate sustainability of dividends as WOLF has not reported any payouts.
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Management
How experienced are the management team and are they aligned to shareholders interests?
3.8yrs
Average management tenure
CEO
Gregg Lowe (59 yo)
4.92yrs
Tenure
US$12,275,822
Compensation
Mr. Gregg A. Lowe has been the President and Chief Executive Officer at Wolfspeed, Inc. (formerly known as Cree, Inc.) since September 27, 2017. Mr. Lowe served as Chief Executive Officer and President at...
CEO Compensation Analysis
Compensation vs Market: Gregg's total compensation ($USD12.28M) is about average for companies of similar size in the US market ($USD12.88M).
Compensation vs Earnings: Gregg's compensation has increased whilst the company is unprofitable.
Leadership Team
Experienced Management: WOLF's management team is considered experienced (3.8 years average tenure).
Board Members
Experienced Board: WOLF's board of directors are considered experienced (4.9 years average tenure).
Ownership
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: WOLF insiders have bought more shares than they have sold in the past 3 months.
Recent Insider Transactions
Ownership Breakdown
Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 6.7%.
Top Shareholders
Company Information
Wolfspeed, Inc.'s employee growth, exchange listings and data sources
Key Information
- Name: Wolfspeed, Inc.
- Ticker: WOLF
- Exchange: NYSE
- Founded: 1987
- Industry: Semiconductors
- Sector: Semiconductors
- Implied Market Cap: US$13.963b
- Shares outstanding: 123.63m
- Website: https://www.wolfspeed.com
Number of Employees
Location
- Wolfspeed, Inc.
- 4600 Silicon Drive
- Durham
- North Carolina
- 27703
- United States
Listings
Company Analysis and Financial Data Status
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2022/08/18 00:00 |
| End of Day Share Price | 2022/08/18 00:00 |
| Earnings | 2022/06/26 |
| Annual Earnings | 2022/06/26 |
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.