STMicroelectronics NV ADR RegS (STM, $37.64): “ST(MEMS)”
By: Kevin
Igoe, AIM Student at Marquette University
Disclosure:
The AIM International Equity Fund currently holds this position. This article
was written by myself, and it expresses my own opinions. I am not receiving
compensation for it, and I have no business relationship with any company whose
stock is mentioned in this article.
Summary
- STMicroelectronics NV ADR
RegS (NYSE: STM) designs, develops, manufactures, and markets
products, which offers discrete and standard commodity components,
application-specific integrated circuits, full custom devices and
semi-custom devices for analog, digital and mixed-signal applications.
- STM has
seen a variety of wins in their automotive segment through new
microcontrollers and power modules.
- STM
intends to target industry leaders within the industrial industry with
leading-edge products adapted to their needs.
- STM
is currently on track with their 2022 plans in revenues and CAPEX investments
to sustain short- and long-term growth.
Key
points: STM through Q1 2022 has earned designed wins with
their power modules and module maker using Gen3 SiC MOSFET technology EV Traction
Inverter applications. What this
technology does is help eliminate tail current during switching which results
in faster operation, reduced switching loss, and increased stabilization. Along with this effective use of new
technology STM has also designed their next-generation stellar automotive MCU
into a new zonal architecture for software-defined vehicles.
In STM’s latest earnings presentation
they explained for their industrial segment they ranked number one worldwide in
general purpose microcontrollers for 2021.
While also introducing their first intelligent sensor processing unit
with Gen3 MEMS. MEMS is a process
technology used to create tiny integrated devices or systems that combine mechanical
and electrical components helping their products become more efficient and in
return attractive to customers. Finally, STM has grown their sockets in various
industrial applications helping them target the growing markets of renewable
energy and power saving technologies.
STM has planned to invest about
$3.4 to $3.6 billion in CAPEX to increase the production capacity and strategic
initiatives. The first of their investments
being in their new industrialization line located in Italy. Based on the strong demand from customers and
planned future investments STM has a goal of revenues for 2022 to be in the
range from $14 billion to $15 billion.
This target goal would mean a growth of about 17%. After quarter one 2022 they have done $3.55
billion in revenue currently being on track with their projected growth for the
current year.
What
has the stock done lately?
In the past week STM has seen an
increase of 3.32% after releasing earnings for quarter one fiscal year 2022 on
April 27th. The company
reported EPS of $0.79 and revenue of $3.55 billion beating estimates in both
categories. This could be the momentum
boost the companies needed after decreasing 11.79% in the past month.
Past
Year Performance:
STM year to date has decreased 25.02%. This has been closely related to the current semiconductor shortage that has been going on for the last year and a half. The reduction in car sales has also impacted STM’s automotive segment operations.
My
Takeaway
I believe STM is well suited for
the future with the semiconductor industry taking a large impact from
implications relating to the Covid-19 pandemic.
Research has shown that the global semiconductor should grow about 10% through
the end of 2022 proving there is growth opportunities for STM to potentially
capitalize on. With their impressive revenue
in quarter one staying on track with management’s plan to reach about $14
billion in total revenue for 2022 and advancements being made in the automotive
and industrial industries I believe STM has tremendous opportunities for
growth.
