Is Vishay Intertechnology (VSH) a Good Contrarian Stock Pick?

Vishay Intertechnology may be undervalued with strong growth indicators, but the 3 analysts following the company give it an rating of hold. Their target prices range from $19.0 to $28.0 per share, for an average of $24.33. At today's price of $27.14, Vishay Intertechnology is trading 11.53% away from its average target price, suggesting there is an analyst belief that shares are overpriced for the stock.

Vishay Intertechnology, Inc. manufactures and sells discrete semiconductors and passive electronic components in Asia, Europe, and the Americas. Based in Malvern, PA, the mid-cap Technology company has 23,900 full time employees. Vishay Intertechnology has provided a 1.5% dividend yield over the last 12 months.

Vishay Intertechnology has a trailing twelve month P/E ratio of 8.7, compared to an average of 27.16 for the Technology sector. Based on its EPS guidance of 2.51, the company has a forward P/E ratio of 10.8.

The average compound growth rate of the company's historical and projected earnings per share is 17.3%. On this basis, the company's PEG ratio is 0.42. However, this growth rate is probably not sustainable. In its place we will use the broader market's estimated 5-year EPS growth rate of 9.9%, which gives us a PEG ratio of 0.74. Even with this more conservative assumption on EPS growth, the PEG ratio suggests that Vishay Intertechnology shares are underpriced.

Furthermore, the market is potentially undervaluing Vishay Intertechnology in terms of its book value because its P/B ratio is 1.77. In comparison, the sector average P/B ratio is 6.23. The company's shares are currently 9.2% above their Graham number, which suggests that they are not trading at a fair value in terms of earnings and net assets.

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $2,668 $2,502 $3,240 $3,497
Gross Margins 25.2% 23.3% 27.4% 30.3%
Operating Margins 10.7% 8.4% 14.4% 17.6%
Net Margins 6.14% 4.91% 9.2% 12.26%
Net Income (MM) $164 $123 $298 $429
Net Interest Income -$33,683 -$31,555 -$17,538 -$17,129
Depreciation & Amort. -$164,461 -$166,230 -$167,037 -$163,991
Earnings Per Share $1.13 $0.85 $2.05 $3.13
EPS Growth n/a -24.78% 141.18% 52.68%
Diluted Shares (MM) 145 145 145 130
Free Cash Flow (MM) $140 $191 $239 $159
Capital Expenditures (MM) -$157 -$124 -$218 -$325
Net Current Assets (MM) $71 $122 $214 $306
Current Ratio 3.27 3.02 2.9 2.92
Long Term Debt (MM) $499 $395 $456 $501
Net Debt / EBITDA -0.41 -0.57 -0.48 -0.11
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.