Vishay Intertechnology, Inc.

VSH Details

Vishay Intertechnology, Inc. (NYSE: VSH) has extensive portfolios of discrete semiconductors and passive electronic components globally, which are essential for new designs in the automotive, industrial, computing, consumer, telecommunications, medical, and other associated areas. Resistors, which are fundamental components used in all electronic circuits to modify and regulate voltage and current levels, account for most of the company's income.

Latest News:

• Dividend Declaration: The firm declared a dividend of USD 0.10 per common share on February 22, 2022, which will be paid on March 30, 2022, to shareholders of record on March 17, 2022.
• New CEO Appointment & Joining: On February 22, 2022, Gerald Paul, the company's President and CEO, has chosen to step down on December 31, 2022. The Board of Directors has named Dr Paul's successor as President and CEO Joel Smejkal, Executive Vice President. In addition, the Board has named Jeff Webster, Executive Vice President and Business Head of Passive Components, to the newly established post of COO, which reports to the CEO. On January 01, 2023, Messrs. Smejkal and Webster will begin their new duties.

FY21 Results:

• Growth in Revenue: The company reported an increase of 29.52% in net revenues to USD 3.24 billion in FY21 (ended December 31, 2021) compared to USD 2.50 billion in FY20, primarily due to increasing demand and improved manufacturing capacities.
• Progress in Net Earnings: VSH reported an increase in net earnings to USD 298.94 million in FY21 vs. USD 123.78 million in FY20.
• Healthy Balance Sheet: As of December 31, 2021, the company had cash & cash equivalents (including short-term investments) of USD 920.85 million and total debt of USD 455.67 million.

Key Risks:

• Cyber Security Risk: To run a business, the company rely on the efficient and uninterrupted functioning of sophisticated information technology systems and networks. New system deployments, computer viruses, security breaches, phishing, spoofing, cyberattacks, facility difficulties, or energy shortages, among other things, might have a substantial detrimental impact on business and the results of operations.
• Supplier Concentration Risk: VSH obtains most of its raw materials from a small number of sources across the world. As a result, if the firm has trouble getting raw materials in adequate quantities, if their quality is poor, or if suppliers raise their prices, its operating performance may suffer.

Outlook:

• Q1FY22 Estimates: As of February 08, 2022, VSH expects Q1FY22 revenues to be in between USD 820-860 million at a gross margin of 27.3% plus/minus 50 basis points.

 Valuation Methodology: EV/Sales Multiple based Relative Valuation

(Source: Analysis by Kalkine Group)

Stock Recommendation:

VSH's share price has fallen 20.67% in the past nine months and made a new 52 week low today. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 23.06.

Considering the significant correction in the stock price in the past nine months, robust topline and bottom-line performance, improvement in margins, intense product demands, current valuation, and associated risks, we recommend a "Buy" rating on the stock at the closing price of USD 18.96, down 3.31% as of February 23, 2022.

VSH's Three-Year Technical Price Chart (February 23, 2022). (Source: REFINITIV, Analysis by Kalkine Group)

Technical Summary Analysis

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.

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