Silicon Motion Technology Corporation American Depositary Shares (SIMO)

FairStock Score: 46/100 — MIXED

Key Financials

Strengths

• High return on equity of 20.3% demonstrating efficient capital deployment
• Altman Z-Score of 10.4 confirms minimal bankruptcy risk and strong solvency

Concerns

• Trades significantly above Graham Number ($55) with negative 155% margin of safety—limited downside protection

AI Analysis

Silicon Motion Technology Corporation American Depositary Shares is a small-cap technology company valued at $4.8 billion. The business generates $1.1 billion in annual revenue with a 4.5% net margin. From a quality standpoint, Silicon shows Altman Z-Score of 10.4 confirms fortress-level solvency and strong 20% ROE. On valuation, the stock is commanding a steep 51.5x multiple, with trades far above its Graham Number ($55) with no margin of safety. Growth dynamics show revenue growing at 13.9% and profit growth of 87.7%. Our composite FairStock Score of 46/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. Operational leverage in the business model means incremental revenue growth could disproportionately boost bottom-line profitability.

Bear Case

At 51x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer