One-glance verdict
Undervalued
$107.00 our estimate vs market $26.40
Wall Street consensus: $60.00 (-43.9% lower than our fair-value estimate)
75% below our estimate, below the bear case
Fundamentals snapshot
Silicom Ltd.
SILC · NMS · Technology · Communication Equipment
Current price
$26.40
52-week range
$13.34 - $63.00
Market cap
$151.74M
Balance sheet
Healthy
-4.77x Concerning
Net cash $21.64M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
2 Risks
2 rewards · 2 risks
- Reward Revenue grew 6.6% last year.
- Reward Free cash flow was positive in 5/10 years.
- Risk Operating margin compressed from 13.2% to -3.2% over 3 years.
- Risk Return on equity was -6.2% last year — the company lost money on shareholders' equity.
What this company does
Silicom Ltd.
Silicom Ltd. creates specialized computer hardware and platforms that help make internet and data networks faster and more efficient, selling these to big tech companies and telecom providers. Their main income comes from selling these advanced products, which is important because it shows their ability to earn money from their specialized designs and manufacturing. This business is key for companies building out their cloud services and communication networks.
How the company got here
Silicom was founded in 1987 and has grown into a global player in the networking and data infrastructure space. Over the decades, it has adapted to the evolving needs of technology, shifting from simpler server components to more complex solutions for cloud computing and telecommunications. This evolution has positioned Silicom as a key supplier for original equipment manufacturers (OEMs) and major service providers who build the backbone of the internet and communication networks we use every day.
What it actually does
Imagine the complex systems that power the internet and your phone's connection – Silicom makes some of the essential building blocks for these systems. They design and manufacture specialized hardware, like advanced network cards that help servers communicate faster, and smart platforms that enable new types of internet services. Think of them as a crucial, behind-the-scenes supplier for companies that build and manage the world's digital infrastructure, providing the specialized computer parts that make everything run smoothly and efficiently.
Connectivity Solutions
This is Silicom's largest business, focusing on the hardware that allows different computing devices and networks to talk to each other. They create server network interface cards (NICs), which are like high-speed ports for servers, and other acceleration cards that help speed up specific tasks like data encryption or compression. These products are vital for cloud data centers and telecommunication companies that need their systems to handle massive amounts of data quickly and reliably.
Smart Platforms
Silicom also develops 'smart platforms,' which are essentially flexible computing systems designed for specific network functions. These platforms are used for things like virtualizing customer equipment (meaning one piece of hardware can perform many different network tasks) and enabling edge computing, where data processing happens closer to where it's generated. This segment caters to the growing demand for more agile and distributed network solutions, particularly in the telecommunications and enterprise sectors.
What management is betting on now
Silicom's management is focused on capitalizing on major technology trends like cloud computing, 5G mobile networks, and the increasing need for edge computing. They are investing in developing advanced solutions that support these areas, aiming to provide the specialized hardware that enables faster, more efficient, and more intelligent networks. The strategy involves working closely with their customers, who are often large technology companies, to co-develop the next generation of networking and data infrastructure components.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$17.36M
FY2025 Q4
$-3.35M
Revenue
$61.93M
Net income
$-11.48M
Diluted EPS
-2.01
Operating cash flow
$-2.16M
Free cash flow
$-3.35M
Fetching…
Sources
Revenue
$58.11M
Net income
$-13.71M
Diluted EPS
-2.28
Operating cash flow
$18.29M
Free cash flow
$17.36M
Fetching…
Sources
Is it cheap or expensive?
Fair value $107.00 vs current price $26.40
Wall Street consensus is the average analyst price target: $60.00 (-43.9% lower than our fair-value estimate).
Our most-likely fair value is $107.00 a share — about 305.3% above today's price of $26.40, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $21.6M - more cash than debt. Interest coverage -4.8x.
Net debt
$-21.64M
Interest coverage
-4.77x
Silicom Ltd.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
SILC
BASELINE
Silicom Ltd.
Total debt $6.00M Interest coverage -4.77x This is the baseline the peer rows are being compared against.
Total debt $300.70M Interest coverage -0.81x Neither company has much profit cushion over interest right now.
Total debt $39.21M Interest coverage 74.68x This peer still has a real interest-payment cushion, while SILC does not.
Total debt $118.39M Interest coverage 8.91x This peer still has a real interest-payment cushion, while SILC does not.
Total debt $6.92M Interest coverage 49.37x This peer still has a real interest-payment cushion, while SILC does not.
What you should know
The case for and against SILC
2 Rewards
2 Risks
Rewards
-
Revenue grew 6.6% last year.
-
Free cash flow was positive in 5/10 years.
Risks
-
Operating margin compressed from 13.2% to -3.2% over 3 years.
-
Return on equity was -6.2% last year — the company lost money on shareholders' equity.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
—
Forward P/E
71.35x
P/B
1.31x
P/S
1.75x
EV/EBITDA
-17.86x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
29.9%
Operating margin
-3.2%
Net margin
-8.5%
ROE
-6.2%
ROA
-3.4%
Health
Liquidity and balance-sheet strength
Debt / equity
0.05x
Current ratio
3.77x
Quick ratio
1.52x
Total debt
$6.00M
Total cash
$27.64M
Growth
How the business has been compounding
Revenue TTM
$394.75M
Revenue 5Y CAGR
-16.7%
EPS TTM
-1.28
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$43.96M
Free CF TTM
$-3.35M
FCF margin
-0.8%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
2017-03-23