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Silicom Ltd (SILC)
NASDAQ:SILC
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Silicom
(NASDAQ:SILC)
49Neutral
Positive Factors
Balance Sheet
Management affirms the company has sufficient cash to alleviate Balance Sheet concerns until a return to OM break-even in approximately 2 years.
Design Wins
Management outlined in great detail the company's design win pipeline, including two expected to ramp materially in early C26.
Share Buyback
With $125MM on the balance sheet and no debt, management appears willing to play the long game while returning cash to shareholders via its buy-back.
Negative Factors
Earnings Performance
EPS was below analyst estimates.
Revenue Decline
Revenues declined 23% y/y due to significant inventory at its major customers, leading to a sizable Operating Loss.
Revenue Loss
Revenues are down over 50% year-over-year due to significant inventory at its major customers, leading to sizable Operating Losses.
Silicom (SILC) vs. S&P 500 (SPY)
Market Cap
$78.13M
Dividend YieldN/A
Average Volume (3M)24.24K
Price to Earnings (P/E)―
Beta (1Y)0.95
Revenue Growth-53.18%
EPS Growth49.22%
CountryUS
Employees260
SectorTechnology
Sector Strength57
IndustryCommunication Equipment
Share Statistics
EPS (TTM)-2.00
Shares Outstanding5,766,286
10 Day Avg. Volume13,797
30 Day Avg. Volume24,237
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.75
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusHold
Number of Analyst Covering1
Silicom Business Overview & Revenue Model
Company DescriptionSilicom Ltd. is a technology company that operates within the networking and communications sector. It specializes in the design, development, and manufacture of connectivity solutions for a variety of networking appliances. The company offers a range of products, including server network interface cards, edge networking devices, and other hardware solutions that enhance data center performance and security.
How the Company Makes MoneySilicom generates revenue primarily through the sale of its networking and connectivity hardware products. The company's key revenue streams include direct sales to original equipment manufacturers (OEMs), service providers, and system integrators who incorporate Silicom's products into their own solutions. Additionally, Silicom benefits from strategic partnerships and collaborations with leading technology companies, which help to expand its market reach and drive sales. The company's focus on innovation and high-performance solutions enables it to maintain competitive pricing and secure recurring business from its established customer base.
Silicom Financial Statement Overview
Summary
Silicom is navigating a challenging financial environment with notable revenue and profitability pressures. While the company maintains a strong balance sheet with low leverage, the consistent financial losses have adversely impacted its income statement. However, efficient cash flow management and a solid equity base provide a buffer against these challenges, indicating potential for recovery if revenue growth can be restored.Income Statement
Silicom has faced significant challenges in maintaining revenue and profitability. The company reported a negative net profit margin and EBIT margin for 2024, indicating ongoing operational difficulties. Revenue declined sharply in 2024, reflecting a revenue growth rate of -53.2% from the previous year. Historically, Silicom has experienced fluctuating revenue growth, with a significant drop post-2022, affecting overall profitability and stability.45
Neutral
Balance Sheet
Silicom demonstrates a solid equity base with a high equity ratio of 85.0% in 2024, indicating financial stability. The debt-to-equity ratio is low at 0.05, suggesting minimal leverage risk. However, the return on equity has been negative due to net losses, impacting overall returns to shareholders. The company maintains a significant cash position, which supports its financial resilience despite recent losses.60
Neutral
Cash Flow
Silicom's cash flow position is relatively strong, with a positive operating cash flow to net income ratio of -1.33 in 2024, indicating effective cash generation relative to reported losses. The company has shown consistent free cash flow generation, with a positive free cash flow in 2024 despite declining operating income. This provides a cushion for operational needs and potential investments, highlighting robust cash flow management.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 58.11M | 124.13M | 150.58M | 128.46M | 107.40M | Gross Profit |
| 16.60M | 28.69M | 51.96M | 44.39M | 33.77M | EBIT |
| -13.28M | -28.67M | 19.93M | 13.06M | 6.25M | EBITDA |
| -11.07M | -616.00K | 22.34M | 15.49M | 8.63M | Net Income Common Stockholders |
| -13.71M | -26.41M | 18.31M | 10.54M | 5.72M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 72.14M | 54.93M | 34.75M | 37.55M | 60.79M | Total Assets |
| 150.41M | 167.73M | 216.20M | 219.60M | 195.89M | Total Debt |
| 6.47M | 5.95M | 7.84M | 9.19M | 10.10M | Net Debt |
| -44.82M | -41.02M | -22.89M | -20.10M | -10.58M | Total Liabilities |
| 22.57M | 19.47M | 36.90M | 61.14M | 41.05M | Stockholders Equity |
| 127.84M | 148.26M | 179.29M | 158.46M | 154.84M |
| Cash Flow | Free Cash Flow | |||
| 17.36M | 29.71M | -8.78M | -5.08M | 1.77M | Operating Cash Flow |
| 18.29M | 31.93M | -4.09M | 1.08M | 4.96M | Investing Cash Flow |
| -4.28M | -7.52M | 8.27M | 16.77M | 15.43M | Financing Cash Flow |
| -9.88M | -7.97M | -1.05M | -9.78M | -16.52M |
Silicom Technical Analysis
Neutral
13.55
Price Trends
14.95
Negative
15.48
Negative
14.59
Negative
Market Momentum
-0.40
Negative
47.64
Neutral
73.46
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SILC, the sentiment is Neutral. The current price of 13.55 is below the 20-day moving average (MA) of 13.80, below the 50-day MA of 14.95, and below the 200-day MA of 14.59, indicating a neutral trend. The MACD of -0.40 indicates Negative momentum. The RSI at 47.64 is Neutral, neither overbought nor oversold. The STOCH value of 73.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SILC.
Silicom Risk Analysis
Silicom disclosed 50 risk factors in its most recent earnings report. Silicom reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Silicom Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
59 Neutral | $10.74B | 10.21 | -6.69% | 3.04% | 7.44% | -10.92% | |
55 Neutral | $86.11M | ― | -6.35% | ― | 12.96% | 48.58% | |
49 Neutral | $78.13M | ― | -8.70% | ― | -53.18% | 49.22% | |
48 Neutral | $100.60M | ― | -7.73% | ― | -14.33% | 29.34% | |
48 Neutral | $124.85M | 142.22 | 111.75% | ― | 5.41% | ― | |
45 Neutral | $47.97M | ― | -27.85% | ― | 8.14% | 33.76% |
* Technology Sector Average
Performance Comparison
SILC
Silicom
13.55
-1.89
-12.24%
KVHI
KVH Industries
5.09
0.20
4.09%
LTRX
Lantronix
2.18
-1.28
-36.99%
AIRG
Airgain
4.15
-1.15
-21.70%
INSG
Inseego
8.32
4.14
99.04%
Silicom Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -23.40% | Next Earnings Date: Apr 28, 2025
Earnings Call Sentiment Neutral
Silicom demonstrated strong strategic momentum with significant design wins and a solid financial position, indicating potential for future growth. However, current financial metrics, including revenue declines and increased losses, present challenges in the short-term.Highlights
Strong Design Win Momentum
Silicom achieved significant design win momentum, increasing the visibility of potential mid to long-term revenue growth. Potential revenues from recent wins are expected to ramp up from 2026.
Cash Generation and Share Buyback
Silicom generated $17.3 million in cash during 2024, with $10 million used to repurchase shares as part of its ongoing buyback plan, highlighting its strategy of shareholder value creation.
Strong Financial Position
Silicom's balance sheet strength is highlighted by working capital and marketable securities amounting to $121 million, including $79 million in cash deposits and highly rated bonds with no debt.
New Design Wins
Silicom announced two major design wins: one with a U.S.-based cybersecurity company and another with a global networking and security as a service leader, with expected revenues ramping up from 2025.
Future Growth Prospects
Silicom aims to achieve 7 to 9 additional design wins in 2025, with expectations of double-digit growth from 2026 onwards.
Lowlights
Revenue and Profit Decline
Revenues for Q4 2024 were $14.5 million, a decline from $18.8 million in Q4 2023. The company reported a net loss of $3.4 million compared to a net loss of $0.5 million in the same quarter last year.
Operating Loss Increase
Silicom reported an operating loss of $2.7 million for Q4 2024, compared to an operating loss of $1.5 million in Q4 2023.
Low Short-term Growth Expectations
Revenues for the first quarter of 2025 are expected to remain stable at $14-$15 million, with growth in 2025 expected to be in the low-single-digits.
Company Guidance
During the Silicom Fourth Quarter 2024 Results Conference Call, the company provided guidance for the upcoming fiscal period, focusing on their strategic growth plans and financial expectations. For the first quarter of 2025, Silicom anticipates stable revenues between $14 million and $15 million, while projecting low-single-digit growth for the entire year. They highlighted a strong pipeline of opportunities, targeting 7 to 9 new design wins in 2025, which they expect to ramp up significantly by 2026, leading to a return to strong double-digit growth. Silicom aims to achieve an EPS above $3 with annual revenues between $150 million and $160 million. The company also emphasized their solid balance sheet, with $121 million in working capital and marketable securities, including $79 million in cash deposits and highly rated bonds, and continued their share repurchase program to enhance shareholder value.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.