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Analysis summary4-Traders Strategies 

Cree, Inc. : End of the technical recovery

11/09/2012 | 10:13am
Opinion : Bearish under USD 32.1
Target price : USD 28.6
Stop loss: USD 33.8

The share is meeting an important level. We suggest caution because this point could stop the bullish trend.

From a fundamental viewpoint, firstly, we note the high valuation of the company. PER for the current year is at 46.44x and expected at 26.93x for next year. With a valuation ratio of 2.2x, the group appears overvalued compared to its business activity.

From a technical viewpoint, the proximity of the USD 32.1 medium-term resistance limits the upside potential on the stock. The uptrend in the short term could be stopped by this level and prices could decrease sharply in the coming sessions. Technical indicators also show an overbought situation that reinforces this bearish scenario. Thus, there is a higher downside potential than upside.

The graphical configuration argues to establish a short position at the current price. The end of the technical rebound, the consolidation phase and overbought situation, there are all the characteristics for short selling. The first objective will be fixed near the USD 28.6 short term support and by extension the USD 22.8 area. This strategy should be protected by a stop loss above USD 32.1.

Cree, Inc. : Cree, Inc. : End of the technical recovery

© 2012

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Financial Ratios

Size 2015e 2016e
Capitalization 3 910 M$ -
Entreprise Value (EV) 3 341 M$ 3 204 M$
Valuation 2015e 2016e
PER (Price / EPS) 150x 53,6x
Capitalization / Revenue 2,33x 2,05x
EV / Revenue 1,99x 1,68x
EV / EBITDA 10,9x 8,43x
Yield (DPS / Price) - -
Price to book (Price / BVPS) 1,48x 1,38x
Profitability 2015e 2016e
Operating Margin (EBIT / Sales) 7,59% 10,00%
operating Leverage (Delta EBIT / Delta Sales) - 3,70x
Net Margin (Net Profit / Revenue) 1,25% 3,56%
ROA (Net Profit / Asset) 1,00% 1,41%
ROE (Net Profit / Equities) 2,55% 2,99%
Rate of Dividend - -
Balance Sheet Analysis 2015e 2016e
CAPEX / Sales   11,8% 6,86%
Cash Flow / Sales (Taux d'autofinancement) 11,1% 11,6%
Capital Intensity (Assets / Sales) 1,25x 2,52x
Financial Leverage (Net Debt / EBITDA) -1,86x -1,86x
Income Statement Evolution
More Financials
EPS Revisions
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