Lattice Semiconductor Doing Exactly What It Said It Would, And Thriving For It

Since my last update on low-power FPGA specialist Lattice Semiconductor (LSCC), the company has continued its winning ways and the shares have outperformed the SOX index by close to 15%. Lattice’s story remains focused on bringing low-power FPGA capabilities to markets that have historically not used FPGAs, offering customers enhanced performance and value over traditional alternatives like microcontrollers and systems-on-a-chip (or SoC).

At this point I believe the company is only at the beginning of a significant ramp into opportunities like factory automation, machine vision, data center, 5G, and auto ADAS. The primary issue remains valuation. While I believe there is a point with growth stock investing where you have to take a longer-term view of valuation drivers, expectations here are already high for a company that hasn't actually grown much in recent years. Low-to-mid-teens revenue growth and long-term adjusted FCF margins in the mid-20%’s can support a high single-digit return from here, but clearly this is not an unappreciated opportunity.

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Lattice Semiconductor Doing Exactly What It Said It Would, And Thriving For It