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Consumer Discretionary : Textiles, Apparel & Luxury Goods | Small Cap Growth
Company profile

PLBY Group, Inc., formerly Mountain Crest Acquisition Corp, is a leisure lifestyle company and owner of Playboy brand. The Company is principally engaged in connecting consumers around the world with products, services, and experiences. It has three reportable segments: Licensing, which includes licensing of Playboy brands to third parties; Direct-to-Consumer, including sales of third-party products through its owned-and-operated ecommerce platforms; and Digital Subscriptions and Content, including the sale of subscriptions to Playboy programming and trademark licensing for online gaming products. The Company's products are classified under four market categories: Sexual Wellness, including intimacy products and lingerie; Style and Apparel, including a variety of apparel and accessories products for men and women; Gaming and Lifestyle, such as digital gaming, hospitality and spirits; and, Beauty and Grooming, including fragrance, skincare, grooming and cosmetics for women and men.

Closing Price
$22.94
Day's Change
0.06 (0.26%)
Bid
--
Ask
--
B/A Size
--
Day's High
23.50
Day's Low
22.71
Volume
(Heavy Day)
Volume:
1,909,836

10-day average volume:
792,802
1,909,836

Semiconductor stocks are rallying -- and they still look like bargains

9:03 am ET August 4, 2021 (MarketWatch)
Print

By Philip van Doorn

Stellar earnings are propelling chip makers' shares, which trade cheaply compared with the broader stock market

Semiconductor stocks haven't risen in a straight line this year, but they have recovered from their last dip in May. Now the group is expected to maintain its head of steam through 2022 with faster growth than the broader stock market. But chip makers as a group trade below the broad indexes on a price-to-earnings basis.

Below is a list of the 10 semiconductor companies expected to increase sales the most through 2023.

Investors are paying close attention to this important technology subsector amid continuing shortages that are affecting many industries and presumably helping pricing for the chipmakers. For example, on Aug. 2, shares of ON Semiconductor Corp. (ON) rose 12% after the company beat analysts' expectations for earnings and sales and provided an upbeat outlook (https://www.marketwatch.com/story/on-semiconductor-stock-surges-after-record-earnings-that-beat-expectations-upbeat-outlook-2021-08-02). The improved guidance points to a coming round of estimate increases by analysts -- the type of action that supports higher share prices over time.

ON CEO Hassane El-Khoury said there's accelerating demand (https://www.sec.gov/Archives/edgar/data/0001097864/000119312521232323/d188483dex991.htm) in "strategic automotive and industrial end-markets."

Semiconductor performance and valuation

To set the stage, check out this chart showing total returns for the iShares Semiconductor ETF (SOXX) against the SPDR S&P 500 ETF (SPY) and the Invesco QQQ Trust (QQQ) (which tracks the Nasdaq-100 Index ) from the end of 2019 through July 30:

SOXX holds 30 stocks of the largest U.S.-listed semiconductor manufacturers and companies that make specialized equipment used by chip makers. The ETF is concentrated, with Nvidia Corp. (NVDA) making up 9.2% of the portfolio. The top five holdings, which also include Broadcom Inc. (AVGO), Intel Corp. (INTC), Qualcomm Inc. (QCOM) and Texas Instruments Inc. (TXN), make up 35% of the portfolio.

That type of performance would lead investors to expect SOXX to trade higher on a price-to-earnings basis than the broader market, but this isn't the case. Here's how forward P/E ratios have moved on a rolling 12-month basis since the end of 2019:

Now let's look at projected growth rates for sales, earnings per share and free cash flow per share for SOXX, SPX and QQQ through 2023, based on consensus estimates among analysts polled by FactSet.

First, sales:

ETF  Expected sales increase -- 2023  Expected sales increase -- 2022  Expected sales increase -- 2021 
iShares Semiconductor ETF  4%  9%  27% 
SPDR S&P 500 ETF Trust  5%  6%  14% 
Invesco QQQ Trust  10%  10%  20% 
Source: FactSet 

The semiconductor group is expected to lead for sales growth during a banner 2021 and rank slightly behind QQQ in 2022. The projected sales-growth rate for QQQ is much lower for 2023, but that is pretty far out, considering how much sales (and sales estimates) have increased this year.

Here are growth projections for EPS:

ETF  Expected EPS increase -- 2023  Expected EPS increase -- 2022  Expected EPS increase -- 2021 
iShares Semiconductor ETF  -2%  12%  40% 
SPDR S&P 500 ETF Trust  9%  9%  45% 
Invesco QQQ Trust  8%  11%  38% 
Source: FactSet 

For EPS, the semiconductor group is expected to remain in the lead through next year, before cooling off in 2023.

Here are growth estimates for free cash flow per share:

ETF  Expected FCF increase -- 2023  Expected FCF increase -- 2022  Expected FCF increase -- 2021 
iShares Semiconductor ETF  -10%  20%  26% 
SPDR S&P 500 ETF Trust  9%  15%  42% 
Invesco QQQ Trust  10%  15%  30% 
Source: FactSet 

These are excellent numbers across the board for 2021 and 2022, with the semiconductor group expected to slow during 2023.

Fast-sales growers in the SOXX group

Now let's look at projected compound annual growth rates (CAGR) for SOXX. Here are the 10 semiconductor companies expected by analysts to show the best three-year sales CAGR through calendar 2023, for which the underlying estimates are available (the sales numbers are in millions of dollars):

Company  Three-year expected sales CAGR  Estimated sales -- 2023  Estimated sales -- 2022  Estimated sales -- 2021  Estimated sales -- 2020 
Advanced Micro Devices Inc. AMD  27.6%  $20,260  $17,986  $15,433  $9,763 
Marvell Technology Inc. MRVL  24.5%  $5,693  $4,965  $4,116  $2,947 
Universal Display Corp. OLED  23.5%  $808  $680  $560  $429 
Nvidia Corp. NVDA  23.2%  $30,253  $27,138  $24,180  $16,189 
Monolithic Power Systems Inc. MPWR  23.0%  $1,573  $1,354  $1,168  $844 
Cree Inc. CREE  17.5%  $1,242  $864  $660  $765 
ASML Holding NV ADR ASML  17.5%  $27,371  $25,346  $22,147  $16,886 
Taiwan Semiconductor Manufacturing Co. Ltd. ADR TSM  17.2%  $77,004  $65,528  $56,365  $47,860 
Qualcomm Inc. QCOM  14.8%  $37,057  $36,781  $33,853  $24,520 
Lam Research Corp. LRCX  14.6%  $18,600  $17,900  $16,119  $12,368 
Source: FactSet 

The sales numbers for 2020 are "estimated" because some companies' fiscal periods don't match the calendar.

Note that estimates for calendar 2023 aren't yet available for five of the SOXX companies, including Micron Technology Inc. (MU) and Skyworks Solutions Inc. (SWKS), which are expected to show the best two-year sales growth rates among the five.

For Micron, analysts expect sales to increase to $38.46 billion in 2022 from an adjusted $23.53 billion in 2020, for a two-year CAGR of 27.9%. For Skyworks, analysts expect sales to grow to $5.87 billion in 2022 from an adjusted $3.8 billion in 2020, for a CAGR of 24.3%.

Leaving the projected sales-growth winners through 2023 in the same order and adding Micron and Skyworks, here are forward P/E ratios and a summary of analysts' opinions about the stocks:

Company  Forward P/E  Share "buy" ratings  Closing price -- July 30  Consensus price target  Implied 12-month upside potential 
Advanced Micro Devices Inc. AMD  40.4  59%  $106.19  $111.70  5% 
Marvell Technology Inc. MRVL  40.8  79%  $60.51  $60.88  1% 
Universal Display Corp. OLED  55.1  71%  $234.49  $258.17  10% 
Nvidia Corp. NVDA  48.6  83%  $194.99  $194.04  0% 
Monolithic Power Systems Inc. MPWR  60.5  77%  $449.26  $462.38  3% 
Cree Inc. CREE  N/A  29%  $92.76  $114.69  24% 
ASML Holding NV ADR ASML  41.5  73%  $766.74  $797.78  4% 
Taiwan Semiconductor Manufacturing Co. Ltd. ADR TSM  27.7  89%  $116.64  $146.33  25% 
Qualcomm Inc. QCOM  16.5  62%  $149.80  $181.91  21% 
Lam Research Corp. LRCX  19.0  73%  $637.41  $746.90  17% 
Micron Technology Inc. MU  7.3  88%  $77.58  $120.55  55% 
Skyworks Solutions Inc. SWKS  17.2  57%  $184.51  $215.71  17% 
Source: FactSet 

The consensus price target for Nvidia is slightly lower than the closing price on July 30. So the analysts consider the stock to be fully valued. Then again, Wall Street is fixated on 12-month price targets -- that's actually a short period for committed long-term investors.

It's also worth noting that Micron -- one of the analysts' favorites on the list -- trades for a very low P/E.

-Philip van Doorn

	

(END) Dow Jones Newswires

August 04, 2021 09:03 ET (13:03 GMT)

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