Maxim Integrated Products (MXIM)
is a manufacturer of semiconductor products. This stock is one of those pleasant finds for the investor: A company with a history of growth, profits, and dividends yet an undiscovered name.
Maxim’s specialty is the production of integrated semiconductor products which convert analog signals to digital and vice-versa. The company's customers include manufacturers of smart phones, communications infrastructure, and industrial businesses. Maxim develops innovative products which allow the company to maintain a high profit margin level.
The company’s fiscal year ended in June. For the 2011 fourth quarter, Maxim reported revenues of $626.5 million, a company record and 3 percent above results from a year earlier. Net income per share came in at 45 cents, up from 19 cents a year earlier.
Since the end of the June 2010 quarter, net income per share has ranged from 36 to 45 cents per share. The quarterly results include a reported gross margin of 63.7 percent and cash flow from operations totaling 39 percent of revenues.
Investment growth factors
There are several factors which may make Maxim attractive to an investor:
- In July, the company completed the acquisition of SensorDynamics, a producer of microelectromechanical (MEMS) sensors. The merger will allow Maxim to grow in the integrated motion and inertial sensor sector.
- At the end of the recent quarter, company cash holdings reached $1 billion, providing approximately $3 per share of cash on the books.
- A history of dividend increases, recently bumped to 22 cents per share. The dividend has grown from 2 cents quarterly in 2002. For the year, the company returned almost $500 million to shareholders in the forms of dividends and stock buybacks.
Analysts at Stifel Nicolaus recently confirmed a buy rating on Maxim and boosted their target price to a range of between $28 and $30. In contrast, analysts at JP Morgan Chase repeated their underweight rating on the stock, rating Maxim Integrated Products a hold. The next earnings report will be on October 28.
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