[null, null, {"document_url": "https://www.fool.com/investing/small-cap/2010/10/14/how-cheap-is-conexant-systems-by-the-numbers.aspx", "unformatted_src": "https://g.fool.com/img/editorial/templates/CNXTMarginRanges.jpg", "src": "https://g.fool.com/img/editorial/templates/CNXTMarginRanges.jpg", "formatted_filename": "CNXTMarginRanges"}, null, {"document_url": "https://www.fool.com/investing/small-cap/2010/10/14/how-cheap-is-conexant-systems-by-the-numbers.aspx", "unformatted_src": "https://g.fool.com/img/editorial/templates/CNXTTrailing5YearGrowthRate.jpg", "src": "https://g.fool.com/img/editorial/templates/CNXTTrailing5YearGrowthRate.jpg", "formatted_filename": "CNXTTrailing YearGrowthRate"}, null, {"document_url": "https://www.fool.com/investing/small-cap/2010/10/14/how-cheap-is-conexant-systems-by-the-numbers.aspx", "unformatted_src": "https://g.fool.com/img/editorial/templates/CNXT5YearAnalystEstimatedGrowthRate.jpg", "src": "https://g.fool.com/img/editorial/templates/CNXT5YearAnalystEstimatedGrowthRate.jpg", "formatted_filename": "CNXT YearAnalystEstimatedGrowthRate"}, null, null, null, null, null, null]

Let's see what those numbers can tell us about how cheap fabless semiconductor maker Conexant Systems might be.

Conexant Systems has a P/E ratio of 3.1 and an EV/FCF ratio of 10.0 over the trailing 12 months. If we stretch and compare current valuations to the five-year averages for earnings and free cash flow, Conexant Systems has negative P/E and EV/FCF ratios.

Numerically, we've seen how Conexant Systems' valuation rates on both an absolute and a relative basis. Next, let's examine ...

In the past five years, Conexant Systems' net income margin has ranged from minus 137.6% to 18.8%. In that same time frame, unlevered free cash flow margin has ranged from minus 6.5% to 10.6%. 

Also, over the past five years, Conexant Systems has tallied up one year of positive earnings and three years of positive free cash flow.


Let's start by seeing what this company's done over the past five years. In that time, Conexant Systems has put up past EPS growth rates that aren't meaningful. This is because it had negative earnings five years ago. Meanwhile, Wall Street's analysts expect future growth rates of 20%.

Here's how Conexant Systems compares with its peers for trailing five-year growth: 

And here's how it measures up with regard to the growth analysts expect over the next five years (there aren't analyst estimates available for Integrated Device Technology): 

The pile of numbers we've plowed through has shown us how cheap shares of Conexant Systems are trading, how consistent its performance has been, and what kind of growth profile it has -- both on an absolute and a relative basis.

Conexant hasn't been consistent, but its one-year P/E ratio of just 3.1 is eye-popping. So is its expected growth of 20%. For a semiconductor company, the numbers can be deceiving. Technologies change and can either make a quick winner or a quick loser. Also the company's P/E ratio is partially inflated by gains it booked from selling some discontinued assets.

If you find Conexant Systems' numbers or technology compelling, don't stop. Continue your due diligence process until you're confident that the initial numbers aren't lying to you.

If you want more stock ideas, check out our featured articles. Or sign up for our latest free report in the box below.

Anand Chokkavelu doesn't own shares in any company mentioned. The Fool owns shares of Marvell Technology Group. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Fool has a disclosure policy. Conexant Systems, Inc.


 Marvell Technology Group Integrated Device Technology 




How Cheap Is Conexant Systems by the Numbers? @themotleyfool #stocks $CNXT.DL, $MRVL, $IDTI, $LSI.DL