Summary
- The start to 2019 was really great for Cree shareholders. Unfortunately, the company has meanwhile lost all the price gains achieved in 2019.
- According to my three-grade-rating, Cree seems to be well positioned in important future markets. Hence, it may be worth investing.
- However, it remains to be seen to what extent the growth initiatives undertaken by the company will pay off in the future.
- At the moment investors have to take several reasons against investing into account.
The start of the year 2019 was really great for Cree (CREE) shareholders. Unfortunately, the company has meanwhile lost all the price gains achieved in 2019:
Data by YChartsAccordingly, I would like to analyze in the following whether an investment in the current phase could be worthwhile or not. According to my three-grade-rating, Cree seems to be well positioned in important future markets. Hence, it may be worth investing but there is definitely no hurry.
The company
According to the company's webpage,
Cree is a leading manufacturer of lighting-class LEDs, lighting products and semiconductor products for power and radio frequency ("RF") applications. The areas of business include LED lighting systems and bulbs, LED chips, high-brightness LEDs, lighting-class power LEDs, and power-switching and RF devices from Wolfspeed (the semiconductor division of Cree).
Given that, the company operates in two reportable segments:
- Wolfspeed, which consists of silicon carbide and gallium nitride materials, power devices and RF devices based on wide bandgap semiconductor materials and silicon. The company's materials products and power devices are used in electric vehicles, motor drives, power supplies, solar and transportation applications. Cree's materials products and RF devices are used in military communications, radar, satellite and telecommunication applications.
- The company's LED Products segment includes LED chips and LED components.
However, recent developments in sales and earnings per share have been disappointing. Accordingly, the share price also fell.
Data by YChartsLooking at the two business segments, both have performed not that great in the last nine months. This affects both sales and profitability but is especially true for the LED-products segment:
