- Wondering if Cirrus Logic at around US$154.82 is giving you fair value or asking too much for its growth story? This article breaks that question down in plain terms.
- The stock has shown strong recent returns, with 5.2% over 7 days, 15.6% over 30 days, 29.4% year to date, 71.6% over 1 year, 73.4% over 3 years, and 84.2% over 5 years, which naturally raises questions about how much optimism is already in the price.
- Recent coverage has focused on Cirrus Logic as part of wider discussions around semiconductor names, with attention on how investors are treating companies exposed to key end markets like consumer electronics and mobile devices. This context helps explain why the stock price and expectations around future performance have been in focus even outside of company specific announcements.
- Cirrus Logic currently has a valuation score of 2 out of 6. Next you will see how traditional valuation checks like P/E, cash flows and assets stack up, before finishing with a more rounded way to think about what this score really means.
Cirrus Logic scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Cirrus Logic Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a company might be worth today by projecting its future cash flows and then discounting those back to a present value.
For Cirrus Logic, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash generation available to shareholders. The latest twelve month free cash flow is reported at about $597.5 million. Analysts provide detailed forecasts for the early years, then Simply Wall St extends these out so there is a full 10 year path of cash flows, with an example projection of $406.1 million in free cash flow in 2028.
Adding up all those discounted cash flows gives an estimated intrinsic value of about $94.97 per share. Compared with a recent share price around $154.82, the DCF output implies the stock is about 63.0% above this model’s fair value estimate, which suggests Cirrus Logic is trading on the expensive side using this framework.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Cirrus Logic may be overvalued by 63.0%. Discover 64 high quality undervalued stocks or create your own screener to find better value opportunities.
Approach 2: Cirrus Logic Price vs Earnings
For a profitable company, the P/E ratio is a straightforward way to connect what you pay per share with the earnings that back it. It helps you see how many dollars investors are currently willing to pay for each dollar of profit.
What counts as a "normal" or "fair" P/E depends on how the market views a company’s growth potential and risk profile. Higher expected growth or lower perceived risk can support a higher P/E, while slower growth or higher uncertainty usually lines up with a lower P/E.
Cirrus Logic currently trades on a P/E of 19.6x. That compares with a peer average of 27.3x and a broader Semiconductor industry average of 39.1x. Simply Wall St also provides a proprietary Fair Ratio of 15.6x, which reflects factors such as the company’s earnings growth profile, industry, profit margins, market cap and specific risks.
This Fair Ratio is more tailored than a simple peer or industry comparison, because it adjusts for those company specific characteristics instead of assuming one size fits all. When set against the current P/E of 19.6x, the Fair Ratio of 15.6x suggests the shares are priced higher than this model would imply.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Cirrus Logic Narrative
Earlier it was mentioned that there is an even better way to understand valuation, so Narratives are introduced here as simple stories you create about Cirrus Logic that connect your view of its future revenue, earnings and margins to a financial forecast and a fair value. All of this is available within an easy tool on Simply Wall St's Community page that updates automatically when fresh news or earnings arrive.
With Narratives, you can see at a glance how your own fair value compares with the current share price and use that gap to decide whether Cirrus Logic looks more attractive or less attractive to you, rather than relying only on a single DCF or P/E snapshot.
For example, one Cirrus Logic Narrative might lean toward the higher analyst fair value of US$163.0 and build in expectations around handset content and mixed signal expansion. Another might sit closer to the lower US$120.0 view that focuses on customer concentration and margin pressure. You can then compare both stories side by side to decide which feels closer to your own assumptions.
For Cirrus Logic, here are previews of two leading Cirrus Logic Narratives to make comparison easier:
Fair value in this bullish narrative: US$163.00 per share.
Gap to this fair value relative to the recent price around US$154.82: about 5.0% below the narrative fair value.
Revenue growth used in this narrative: 4.42% a year.
- Assumes Cirrus Logic continues to build on its position in smartphone audio and mixed signal content, with analysts using revenue of US$2.2b and earnings of US$422.2m by 2029 in their fair value work.
- Builds in buybacks, with analysts using share count reductions of around 1.07% a year and a 25.8x P/E on 2029 earnings, alongside a 10.6% discount rate.
- Flags key risks such as reliance on a major customer, the early stage of diversification into PCs and automotive, and potential pressure on margins if competition or industry changes reduce pricing power.
Fair value in this bearish narrative: US$120.00 per share.
Amount the recent price around US$154.82 sits above this fair value: about 29.0% over the narrative fair value.
Revenue growth used in this narrative: 2.06% a year.
- Assumes slower progress in reducing reliance on major smartphone customers, with analysts using 2029 revenue of US$2.1b and earnings of US$336.1m as the basis for their lower fair value.
- Uses a lower earnings path and thinner margins, with profit margin at 16.0%, a 23.8x P/E on 2029 earnings, and a 10.58% discount rate, which together point to US$120.00 as a fair value anchor.
- Highlights risks around competition, higher costs, and rising R&D spend, while also noting that successful diversification into areas like laptops, automotive and AI enabled devices could weaken the bearish case over time.
If you want to see these stories in full, including the detailed forecasts and all the assumptions behind them, it is worth stepping through the Cirrus Logic Community Narratives directly, then deciding which version of the future feels closest to how you see the company.
To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Cirrus Logic on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.
Do you think there's more to the story for Cirrus Logic? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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