Is Cirrus Logic (CRUS) a Semiconductor Stock Worth Adding to Your Portfolio?

Cirrus Logic, Inc. (CRUS), a leader in audio engineering and semiconductor innovation, recently reported impressive financial results for the third quarter of fiscal year 2025. The company’s revenue of $555.74 million surpassed the analysts’ estimate of $510.03 million. Also, its non-GAAP EPS of $2.51 beat the street’s expectation of $2.04.

CRUS is an innovator in low-power, mixed-signal technology and offers audio solutions for smartphones, laptops, tablets, wearables, and AR/VR. After establishing a strong foothold in the audio category, the company expanded to include new product categories such as camera controllers, haptics and sensing, and power-related products.

In 2024, the company accelerated its operations with innovations like digital-to-analog converters (DACs) and ultra-high-performance CODEC designed for superior audio fidelity. Also, by the year-end, it launched its new range of timing products for superior audio experiences in automotive and professional audio applications.

On the financial front, CRUS delivered continued growth. Its revenue in the audio segment grew by an impressive 9.4% from the year-ago value to $346.27 million, and its gross margin rose to 53.6% in the period. Also, through strategic partnerships with leading companies like Intel, CRUS' prospects appear promising in the coming years.

Besides, prompted by the growing technological advancements, focus on cutting-edge technologies, and high demand for semiconductors in areas like AI, 5g, IoT, and automotive, the semiconductor market is poised for robust growth. Statista projects the U.S. semiconductor market to reach a revenue of $96.12 billion in 2025. The market is projected to grow to $131 billion by 2029 at a CAGR of 8.1%.

Cirrus Logic’s operational efficiency has also propelled its stock performance. Shares of CRUS have surged 4.9% year-to-date and 33.1% over the past year to close its last trading session at $104.41.

Let’s look at factors that could influence CRUS’ performance in the upcoming months.

Positive Recent Developments

On January 7, 2025, CRUS announced a collaboration with Intel to launch a reference design based on the new Intel® Core™ Ultra processors with Cirrus Logic's high-quality audio solutions. The reference design effects a significant advancement in PC audio technology, offering enhanced sound quality, low power consumption, and flexible audio options for a wide range of PC segments.

Through strategic collaboration, the companies will bring an impressive audio experience from mainstream to premium PCs and simplify the design effort for PC OEMs and ODMs.

Also, on December 5, 2024, CRUS launched its new range of timing products, created with the objective to deliver superior audio experiences in automotive and professional audio applications. The latest product line’s launch is designed to bring innovation to the industry and provide existing customers with a smooth transition from their previous high-performance timing devices.

This will enhance their functionality and elevate the overall user experience.

Robust Financials

CRUS’ net sales increased 2.6% year-over-year to $555.74 million during the third quarter that ended December 28, 2024. Its non-GAAP gross profit grew 5.4% from the year-ago value to $298.14 million. The company’s non-GAAP operating income of $168.90 million indicates growth of 8.2% from the prior year’s quarter.

In addition, the company’s non-GAAP net income and EPS were $138.31 million and $2.51, respectively, reflecting increases of 10.4% and 11.5% year over year.

Also, as of December 28, 2024, the company’s cash and cash equivalents stood at $526.44 million, compared to $483.93 million as of December 30, 2023.

For the fourth quarter fiscal 2025, the company expects revenue between $350 million and $410 million, whereas its gross margin is forecasted to be between 51% and 53%.

Solid Historical Growth

CRUS’ revenue and EBITDA have grown at respective CAGRs of 5.2% and 7.9% over the past three years. The company’s EBIT has increased at a CAGR of 10% over the same timeframe, while its net income and EPS have improved at CAGRs of 6.1% and 8.6%, respectively.

Furthermore, the company's tangible book value and levered free cash flow have increased at CAGRs of 16.1% and 23.2%, respectively, over the past three years.

Favorable Analyst Estimates

Analysts expect CRUS’ revenue for the fourth quarter (ending March 2025) to increase 2.3% year-over-year to $380.26 million. The consensus EPS estimate is set at $1.18 for the same quarter. Moreover, CRUS has an impressive earnings surprise history, having topped consensus revenue and EPS estimates in all of the trailing four quarters.

For the fiscal year ending March 2025, the company’s revenue and EPS are expected to grow 3.5% and 6.9% year-over-year to $1.85 billion and $7.05, respectively. Additionally, Street expects its revenue for the fiscal year 2026 to increase 0.8% year-over-year to $1.87 billion.

High Profitability

CRUS’ trailing-12-month gross profit margin of 52.18% is 3.8% higher than the industry average of 50.25%. Its trailing-12-month EBIT margin of 20.44% is significantly higher than the industry average of 5.60%. Similarly, its trailing-12-month net income margin of 16.55% is 299.3% higher than the industry average of 4.14%.

Furthermore, the stock’s trailing-12-month ROCE, ROTC, and ROTA of 16.21%, 11.58%, and 12.91% favorably compared to the industry averages of 4.84%, 3.10%, and 2.08%, respectively.

Discounted Valuation

In terms of forward non-GAAP P/E, CRUS is currently trading at 14.81x, 42.3% lower than the industry average of 25.68x. The stock’s forward EV/EBITDA and Price/Sales of 9.37x and 3x are considerably lower than the industry averages of 16.42x and 3.26x, respectively.

Additionally, the stock’s forward EV/Sales and EV/EBIT of 2.63x and 10.34x are 23.4% and 53.7% lower than the industry averages of 3.44x and 22.32x, respectively.

POWR Ratings Reflect Optimism

CRUS’ solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. CRUS has an A grade for Quality, consistent with its higher-than-industry profitability.

In addition, the stock has a B grade for Sentiment and Value, which is in sync with its impressive analysts’ estimates, solid financial performance, and historical growth.

CRUS is ranked $2 in the list of 90-stock Semiconductor & Wireless Chip industry.

Beyond what I have stated above, we have also given CRUS grades for Growth, Momentum, and Stability. Get access to all the CRUS Ratings here.

Bottom Line

CRUS reported better-than-expected earnings for the third quarter of fiscal 2025. The company’s innovative products and solutions, strong industry position, strategic collaborations, and solid financial performance position it for significant growth in the future. Also, the semiconductor industry’s growing demand will drive the company’s operations.

Given CRUS’ solid financials, accelerating profitability, and promising growth outlook, investors can consider investing in this stock.

How Does Cirrus Logic, Inc. (CRUS) Stack Up Against Its Peers?

While CRUS has an overall POWR Rating of B, investors could also check out these other stocks within the Semiconductor & Wireless Chip industry with A (Strong Buy) or B (Buy) ratings: Qualcomm Inc. (QCOM), SMART Global Holdings, Inc. (SGH), and Photronics, Inc. (PLAB).

For exploring more A and B-rated semiconductor stocks, click here.

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CRUS shares were trading at $106.30 per share on Friday afternoon, up $1.89 (+1.81%). Year-to-date, CRUS has gained 6.75%, versus a 2.57% rise in the benchmark S&P 500 index during the same period.

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.

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