GrowthTurtle
Data Science PhD & IEEE Fellow, Ex-Two Sigma
Credo looks cheap against its earnings at about 17.5x next year's EPS, versus the roughly 38x chipmakers usually get. At 38x the $9.63 forecast EPS, give or take 12%, fair value is about $322-410, leaving the stock near $168 about 48% below the low end. The view leans heavily on forecasts, as forward EPS is 284% above trailing, and it is a valuation-levels read rather than fundamental work. x.comÂ
Credo's repeatedly conservative guidance and quarterly beats suggest analysts understate next year's EBIT. It trades at 15x their estimate, but likely 12-13x next year's EBIT if management's guidance holds. Management has executed as well as almost any company in recent years, and the multiple could easily end up closer to 10x than 15x. x.comÂ
Credo's near-total share of AI data-center cables and unchanged estimates make its lower multiple look like a fear-driven opportunity. Its stock went from 27x to 20x forward earnings while the supply chain building those systems guided 2027 revenue to double. Buyers this week will probably be very happy a year from now. x.comÂ
Credo needs a slightly lower price before adding. FY28 EPS of about $10, a 70% growth rate from today, would support a $350 stock at 35x, a 0.5x PEG. x.comÂ
Credo's projected EPS surge makes it one of the semiconductor industry's most explosive growth stories. The chart puts EPS at $0.31 in FY25, $9.69 in FY28E and $12.45 in FY29E, nearly 40x over four years. x.comÂ
Credo is a steal at about 70 times forward free cash flow given how fast cash generation is growing, supporting a raised target of $280 by the end of 2027. Revenue is expected to grow more than 80% year over year, and free cash flow reached about $178 million this quarter, up over 225%, with a credible path to roughly $600 million a year. It has no debt and expanding profitability. Any after-hours weakness misses the point; what matters is where the stock will be next year. x.comÂ
Credo was overpriced even with great earnings, and it is still a little pricey at $190. Per @wallstengine, revenue rose 114.7% to $479.0M, beating estimates, and Q2 guidance of $525M-$535M also topped expectations, yet the stock is down $112 from its high of a few months ago. Valuation matters, and $150-$170 would be a decent entry point. x.comÂ
Celestica's Q3 beat and first 2027 guidance make its growth look underpriced. Revenue rose 83% and EPS 109%; management raised 2026 revenue guidance to $21B and put 2027 revenue at $40B-plus and EPS at $21.50, implying about 90% and 85% growth. At roughly 12x 2027 EPS after hours, shares are probably 50% undervalued; initial targets may have upside, with revenue growth potentially reaching 100%. At $34.50 of 2028 EPS and 24x earnings, shares would be worth $828. x.com x.com x.com x.com x.comÂ
Credo was an easy buy because its share price was ridiculously low against estimated revenues, as a quick look at its last quarterly report showed despite the hate. @KawzInvests adds that the DustPhotonics deal removes the bear case that a shift to optical breaks Credo, giving it a silicon photonics portfolio from 400G to 1.6T with a 3.2T roadmap. x.comÂ
Credo is buying its re-acceleration at a flat gross margin, and at 36 times forward earnings, growth without margin is worth less. Q2 revenue guidance of $525-535M topped the $514.7M consensus, but non-GAAP gross margin went 68.6%, 68.3%, 68.0% and is guided at 67-69% again, while the beat over estimates shrank from 41% to 0.8%. Three customers are 77% of revenue. Credo sells copper, and Marvell expects scale-up optics from 2027. A print above 69% on $530M would prove this too cautious. x.com … Show more
Credo's revenue is projected to double by 2029, which makes the stock hard not to be bullish on. x.comÂ
