Saturday, June 9, 2018

Alps Electric Looking To Recover After Swallowing A Sour Apple

As one of the companies that saw a significant hit to earnings and expectations from disappointing sales of Apple’s (AAPL) iPhone X, Alps Electric (OTCPK:APELY) is in good company, but that’s hardly much comfort to investors. With weak camera actuators sales (tied to the X) leading to much lower guidance for the next fiscal year, Alps shares have lost about 10% of their value since my last update, though they are still up about 25% from my initial write-up and have done okay compared to a grab-bag of other Apple suppliers including Cirrus (CRUS), Dialog (OTCPK:DLGNF), and Skyworks (SWKS).

Alps needs a rebound in camera actuators to drive some near-term excitement, and recent reports have been somewhat encouraging. It also helps that Alps management took what I believe to be a big swing at its FY’19 guidance, leaving the door open for beat-and-raise quarters as the year moves on. What’s more, the long-term opportunity in auto components remains attractive. I’ve trimmed back my long-term revenue and FCF margins assumptions a bit, but the shares look interesting now for investors who can afford to wait for momentum to return to the financial results.

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Alps Electric Looking To Recover After Swallowing A Sour Apple

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