NXP Semiconductors (NASDAQ:NXPI) is a chip stock you definitely don’t want to sleep on this year, as this company has all of the puzzle pieces in place for a long-term winner. I am bullish on NXPI stock because NXP Semiconductors has everything you could ask for, from good value to a decent yield and steady growth.
Based in the Netherlands, NXP Semiconductors manufactures microprocessors and other tech products, including automotive radar technology. For instance, NXP Semiconductors is teaming up with China-based automaker NIO (NYSE:NIO) to enhance NIO’s vehicles with NXP’s 4D imaging radar solution.
After a year of global tech component shortages (followed by an oversupply in some instances), people want to know if NXP Semiconductors has been able to step up to the plate and bolster its bottom line. The answer is definitely yes, as NXP’s recently released financial report indicates multiple Street beats — yet, at the same time, NXPI stock is still trading at a very reasonable price.
NXP Semiconductors Checks All the Right Boxes
While other chipmakers get all of the attention in the U.S., NXP Semiconductors is almost completely under the radar on Wall Street. That’s probably because the company is in the Netherlands, but this isn’t a reason to ignore NXP Semiconductors. The company is quite large, with a market cap of ~$45 billion and over 34,000 employees, and NXP Semiconductors checks all of the necessary boxes for selective investors.
No matter how you slice it, NXP Semiconductors has practically everything you could want in a publicly-listed tech business. Quarter after quarter, the company has maintained total revenue above $3 billion in the past year. That’s an impressive feat, considering the pressure that supply-chain constraints and economic uncertainty placed on chipmakers last year.
In addition, NXP Semiconductors has consistently outpaced analysts’ quarterly EPS estimates during the past two years. The company’s most recent quarterly earnings result is another winner — but we’ll get to that in a moment.
Furthermore, NXP Semiconductors has a relatively high dividend yield compared to its peers. Specifically, NXP offers a forward annual dividend yield of 2.4%, which is double the sector average yield of 1.025%.
Also, NXPI stock looks like it presents good value now, as there’s plenty of room to the upside. The stock made a run for $195 a couple of times during the past year, so that’s a reasonable near-term target (NXPI is currently near $172). Plus, NXP Semiconductors’ GAAP trailing 12-month price-to-earnings (P/E) ratio of 15.7x is lower than the sector median P/E ratio of 21.6x, so we can again conclude that there’s a better-than-fair value for prospective investors here.
NXP Semiconductors Maintains Its Earnings Winning Streak
In case you’re still not impressed with NXP Semiconductors, you should observe that the company just racked up another earnings win. NXP’s first-quarter 2023 financial results are as positive as anyone could reasonably have expected. Besides, the company’s forward guidance indicates that NXP Semiconductors’ management is confident about the company’s future.
The only sticking point might be that NXP Semiconductors’ Q1-2023 revenue of $3.12 billion was down 0.6% percent year over year. Still, while that’s a practically flat result, it edged out the consensus estimate of $3 billion. What really impresses me is NXP’s 17% year-over-year growth in its automotive segment sales to $1.83 billion – and this occurred before the aforementioned announcement of the collaboration with NIO.
Now looking at the bottom line, NXP Semiconductors reported quarterly EPS of $3.19, outpacing the consensus forecast of $3.02. Additionally, the future looks bright as NXP guided for current-quarter revenue of $3.1 billion to $3.3 billion, which is higher than analysts’ consensus estimate of $3.04 billion. On top of all that, NXP Semiconductors forecasts current-quarter non-GAAP EPS between $3.07 and $3.49 with a midpoint of $3.28, and it’s likely that another earnings beat is in the cards.
Is NXPI Stock a Buy, According to Analysts?
Turning to Wall Street, NXPI stock comes in as a Moderate Buy based on three Buys and three Hold ratings. The average NXP Semiconductors stock price target is $202.17, implying 17.7% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell NXPI stock, the most accurate analyst covering NXPI stock (on a one-year timeframe) is Ross Seymore of Deutsche Bank (NYSE:DB), with an average return of 19.35% per rating. See below.
Conclusion: Should You Consider NXP Semiconductors Stock?
Just about any type of investor can find reasons to like NXP Semiconductors now. Whether you’re interested in dividend payouts, good value, consistent earnings, or just a top-tier tech business that hardly anybody’s talking about in the U.S., NXP Semiconductors fits the bill.
It actually wouldn’t surprise me if NXP Semiconductors starts to trend in the financial press and social media in the next couple of years. So, consider getting ahead of the crowd with NXPI stock.
