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What Happened to Cree?

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Cree’s falling shares in April

On April 25, 2017, Cree (CREE) shares fell more than 11% after the firm announced its fiscal 3Q17 results (ended March 2017). Cree is a major player in the LED (light-emitting diode) space and reported EPS (earnings per share) of $0.01 in fiscal 3Q17, as compared to the analyst consensus estimate of $0.04.

Cree’s profitability fell as well in the last reported quarter with a GAAP (generally accepted accounting principles) net loss margin of 0.26%. In fiscal 3Q16, Cree reported EPS of $0.17.

Cree posted revenue of ~$341.5 million in fiscal 3Q17, however—higher than the analyst estimate of ~$339.4 million. Its revenue fell 6.9% YoY (year-over-year) in fiscal 3Q17.

Cree’s stock dropped by almost 20% in April to close at $21.88. Notably, last month, Cree announced a JV (joint venture) with San’an Optoelectronics in order to produce “high-performing, mid-power lighting class LED packaged products.”

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Stock returns and analyst estimates

Cree has generated returns of -13.4% in the trailing-12-month period and -17.1% YTD (year-to-date), after a fall of 1% in calendar 2016. Cree’s mean analyst target is $24.05, with a median target of $25.00. The company is thus trading at a discount of 14% to its median target estimates.

Cree has a market cap of $2.1 billion. By comparison, peer companies OSRAM LICHT (OSAGY), Microsemi (MSCC), and Acuity Brands (AYI) have market caps of $6.3 billion, $5.1 billion, and $7.7 billion, respectively.

Continue to the next part for a closer look at F5 Networks.

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