Sexton Equity Analysis
Long/short equity, value, tech

Silicom: Upcoming Earnings And Strong Growth Prospects Signal Potential Upside

Executive Summary: I have been following Silicom (NASDAQ:SILC) for the last few months, longing the stock from mid $40s to its stock shelf in March. Since then, SILC has had an abrupt price drop after Q1 earnings. Despite beating EPS estimates by 5 cents, the company is still dropping, almost 50% from its 52 week high. Bearish sentiment has centered on reduced earnings caused by increased tax rates. A tax increase to 14.6% resulted in $691 thousand in income taxes and an EPS of $0.56 for Q1. The 4.8% net increase in tax rate against last quarter effectively diminished net income by an additional $227 thousand. Using past tax rates, EPS would have been $0.04 higher; a result...

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