AMBA Prices

Boy have I been taken to the cleaners on Ambarella over the last few months. I’m down over a ? at today’s price. However, take a look at the price ranges below.


Qtr	Qtr	EPS	QoQGr	TTMEPS	TTMGr	Hi	Lo	Close	P/E	P/E Hi	P/E Lo	1YrPeg
Oct	201104	0.19				$7.42	$5.55	$7.22				
Jan	201201	0.04				$13.42	$7.42	$9.96				
Apr	201202	0.07				$16.00	$9.04	$13.70				
Jul	201203	0.19		0.49		$19.44	$12.94	$16.60	33.9	39.7	26.4	
Oct	201204	0.25	31.6%	0.55		$7.42	$5.55	$7.22	13.1	13.5	10.1	
Jan	201301	0.04	0.0%	0.55		$13.42	$7.42	$9.96	18.1	24.4	13.5	
Apr	201302	0.16	128.6%	0.64		$16.00	$9.04	$13.70	21.4	25.0	14.1	
Jul	201303	0.21	10.5%	0.66	34.7%	$19.44	$12.94	$16.60	25.2	29.5	19.6	0.72
Oct	201304	0.30	20.0%	0.71	29.1%	$22.67	$13.16	$20.55	28.9	31.9	18.5	0.99
Jan	201401	0.13	225.0%	0.80	45.5%	$36.49	$19.55	$32.03	40.0	45.6	24.4	0.88
Apr	201402	0.17	6.3%	0.81	26.6%	$35.38	$24.47	$24.85	30.7	43.7	30.2	1.15
Jul	201403	0.29	38.1%	0.89	34.8%	$33.81	$21.60	$28.61	32.1	38.0	24.3	0.92
Oct	201404	0.57	90.0%	1.16	63.4%	$46.78	$27.40	$44.29	38.2	40.3	23.6	0.60
Jan	201501	0.18	38.5%	1.21	51.3%	$63.20	$44.20	$55.31	45.7	52.2	36.5	0.89
Apr	201502	0.56	229.4%	1.60	97.5%	$77.39	$48.50	$73.15	45.7	48.4	30.3	0.47
Jul	201503	0.68	134.5%	1.99	123.6%	$129.19	$70.39	$115.87	58.2	64.9	35.4	0.47
=====================================================================================================
Oct	201504	0.89	56.1%	2.31	99.1%	$149.96	$54.56	$61.54	26.6			0.27
Jan	201601	0.64	255.6%	2.77	128.9%	$179.83	$65.43	$61.54	22.2			0.17
Apr	201602	0.78	39.4%	2.99	86.9%	$194.16	$70.65	$61.54	20.6			0.24
Jul	201603	0.95	39.4%	3.26	63.8%	$211.57	$76.98	$61.54	18.9			0.30
Oct	201604	1.24	39.4%	3.61	56.3%	$234.36	$85.27	$61.54	17.0			0.30

With today’s drop, many people are probably surprised at the depths to which the stock has fallen. However, on a historical value basis, there is still some room to drop. If Ambarella hits analyst expectations of $0.89 in its fourth quarter, which closes in October, the TTM earnings will be $2.31 and reflect a P/E of 26.6 at today’s price. The value was actually lower about a year ago, hitting 23.6 in the October 2014 quarter. Earnings are better now. But given the fear in the market, it’s logical to expect a high-flying tech company like Ambarella to get whacked.

That’s what makes this opportunity so interesting now. If Ambarella hits analyst expectations for the next fiscal year, it’s P/E at today’s price will be 17. Given the future growth prospects and historical value ranges, it’s a great opportunity to buy more shares in the company.

At $3.61 in earnings for next fiscal year, here is a look at the price and increase at various multiples:


20	25	30	35	40	45	50
$72	$90	$108	$126	$144	$162	$181
17%	47%	76%	105%	135%	164%	193%

It looks like revenues are increasing well, margins are improving and the future looks bright (I’ll post more once I do the analysis).

DJ

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