• If you are wondering whether Cirrus Logic is priced attractively right now, the starting point is to understand how its current share price compares with different measures of value.
• The stock last closed at US$127.33, with returns of 3.3% over 7 days, 4.8% over 30 days, 6.4% year to date, 25.6% over 1 year, 42.0% over 3 years and 35.9% over 5 years. These figures may shape how you think about both opportunity and risk.
• Recent news coverage around Cirrus Logic has focused on its role within the broader semiconductor space and how investors are thinking about the sector's long term demand story. This coverage helps explain why some market participants are reassessing what they are willing to pay for the shares today.
• Cirrus Logic currently has a valuation score of 2 out of 6, based on how many checks suggest the stock looks undervalued. Next, we will look at what different valuation approaches say about that number, before finishing with a way to tie all of them together more effectively.

Cirrus Logic scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Cirrus Logic Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company could be worth by projecting its future cash flows and discounting them back to today using a required rate of return. It is essentially asking what those future dollars are worth in present terms.

For Cirrus Logic, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections. The company’s last twelve months Free Cash Flow is about US$524.8 million. Analysts provide explicit forecasts for the next few years, and beyond that Simply Wall St extrapolates out to 2035. For example, projected Free Cash Flow is US$369.8 million in 2026 and US$442.9 million in 2035, all in US$.

When all those projected cash flows are discounted back to today, the model arrives at an estimated intrinsic value of US$91.68 per share. Compared with the recent share price of US$127.33, the DCF output suggests Cirrus Logic is 38.9% overvalued on this measure.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Cirrus Logic may be overvalued by 38.9%. Discover 864 undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Cirrus Logic Price vs Earnings

For a profitable business, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. It ties the share price directly to current profits, which most investors watch closely.

What counts as a reasonable P/E depends on how investors see the company’s growth prospects and risk profile. Higher expected growth or lower perceived risk can justify a higher P/E, while slower growth or higher uncertainty often goes with a lower multiple.

Cirrus Logic currently trades on a P/E of 17.12x. That sits below both the Semiconductor industry average P/E of 40.81x and the peer group average of 29.56x. Simply Wall St’s Fair Ratio for Cirrus Logic is 16.38x, which is its own estimate of an appropriate P/E given factors such as earnings growth, industry, profit margins, market cap and company specific risks.

The Fair Ratio is more tailored than a simple comparison with peers or the industry, because those broad benchmarks do not control for differences in growth, risk or profitability. Here, the Fair Ratio of 16.38x is close to the actual P/E of 17.12x, which points to Cirrus Logic trading only slightly above that modelled level.

Result: ABOUT RIGHT

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1428 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Cirrus Logic Narrative

Earlier we mentioned that there is an even better way to think about valuation, so let us introduce you to Narratives.

A Narrative is simply your story about a company, written in numbers, where you set your own view of fair value along with expectations for future revenue, earnings and profit margins.

On Simply Wall St, Narratives connect that story to a full financial forecast and then to a fair value estimate, so you can clearly compare your view with the current share price and decide whether Cirrus Logic looks attractive, fairly priced or expensive to you.

These Narratives live in the Community section of the platform, are used by millions of investors, and update automatically when new information such as news or earnings is added. This means your story and valuation stay current without extra effort.

For example, one Cirrus Logic Narrative in the Community might point to a fair value well below US$127.33 while another sees a fair value well above that level. This shows how different assumptions can lead to very different conclusions about the same stock.

Do you think there's more to the story for Cirrus Logic? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.