Despite a Q3 pre-announcement indicating better results, Himax Technologies (NASDAQ: HIMX) touched new lows recently. At a less expensive forward P/E of below 25 times, the LCoS supplier and 3D sensing supplier has a niche market whose revenue potential could finally reward shareholders.
Himax said its third-quarter will beat the $182.93M consensus estimate, coming in at $188.4M. Gross margin will come in at 23.4% while diluted EPS will be $0.026. Although the earnings is modest, Himax is spending heavily on capital expenditure as it pivots the business away from legacy products. This takes time and money and hurts earnings. The company still acted responsibly for shareholders, by paying out its annual dividend.
On Oct. 26, Himax announced it teamed up with Kneron to develop 3D Sensing and AI-enabled security and surveillance solutions. The new use-case for the technology diversifies Himax’s reliance on high-end smartphones alone for sales. As world economies slow along with smartphones reaching an oversaturation point, Himax will have a big addressable market to work with for years to come.
A revenues multiples valuation model would give Himax stock a fair value of $6.76, well-above the current share price. This model assigns a 1.5x LTM Revenue multiple, a 1.5x forward Revenue Multiple, and compares the stock to Kopin (NASDAQ:KOPN), Synaptics (NASDAQ:SYNA), Applied Materials (NASDAQ:AMAT), and Amkor (NASDAQ: AMKR).
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