Breaking Down Cohu, Inc. (COHU) Financial Health: Key Insights for Investors

As an investor, are you trying to get a grip on the financial stability and future prospects of Cohu, Inc. amidst the volatile semiconductor industry? Did you know that Cohu's full-year 2024 revenue reached $401.8 million, despite a GAAP loss of $69.8 million, or $1.49 per share? And while facing a challenging market, the company holds a solid $262.1 million in cash and investments. Let's dive into a detailed analysis of Cohu's financial performance, strategic moves, and future outlook to equip you with the insights needed to make informed decisions.

Cohu, Inc. (COHU) Revenue Analysis

Understanding Cohu, Inc.'s revenue streams involves examining its primary revenue sources, year-over-year growth, segment contributions, and significant changes. Cohu is a global technology company that supplies equipment and services to the semiconductor and electronics manufacturing industries.

Cohu's revenue is derived from two main segments:

• Semiconductor Test and Inspection Systems: This includes equipment used for testing and handling semiconductors.
• Micro-Electromechanical Systems (MEMS) Test Solutions: This segment provides test solutions for MEMS devices.

Analyzing Cohu, Inc.'s revenue streams involves looking at the geographic distribution of its sales. Key regions include North America, Asia, and Europe.

Here is revenue data for the fiscal year 2024:

Cohu Inc. reported revenue of $648.4 million for the year 2024, a decrease of 12.8% compared to $743.7 million in 2023. The decrease was influenced by a challenging macroeconomic environment, particularly in the automotive, industrial, and mobile markets. However, there was increased demand in the computing sector, which partially offset the declines in other areas.

Here's a breakdown of Cohu's revenue performance in 2024:

• Total Revenue: $648.4 million, down 12.8% year-over-year.
• Semiconductor Test and Inspection Systems: This segment experienced a decrease due to market headwinds.
• MEMS Test Solutions: Performance varied based on specific market demands.

A more detailed look at the financial results shows these key figures:

• Q4 2024 revenue was $167.4 million.
• Gross margin for 2024 was 42.4%.
• Operating expenses totaled $219.7 million.
• Net income for 2024 was $29.9 million, or $0.58 per share on a fully diluted basis.
• Cash flow from operations was $57.4 million.

Here's a brief overview of Cohu's financial performance:

For more insight into Cohu's values, see: Mission Statement, Vision, & Core Values of Cohu, Inc. (COHU).

Cohu, Inc. (COHU) Profitability Metrics

Profitability is a critical indicator of a company's financial health, revealing how efficiently it generates earnings from its revenue. For investors in Cohu, Inc. (COHU), a thorough examination of gross profit, operating profit, and net profit margins, alongside their trends and industry comparisons, offers valuable insights. Furthermore, analyzing operational efficiency, such as cost management and gross margin trends, provides a deeper understanding of the company's financial performance. You might also be interested in: Exploring Cohu, Inc. (COHU) Investor Profile: Who’s Buying and Why?

To evaluate Cohu, Inc.'s profitability, one can look at several key metrics:

• Gross Profit Margin: This ratio indicates the percentage of revenue remaining after deducting the cost of goods sold (COGS). A higher gross profit margin suggests that Cohu, Inc. is efficient in managing its production costs.
• Operating Profit Margin: This metric measures the percentage of revenue remaining after deducting both COGS and operating expenses. It reflects Cohu, Inc.'s efficiency in managing its core business operations.
• Net Profit Margin: The net profit margin shows the percentage of revenue that translates into net income after all expenses, including taxes and interest, are paid. It represents the overall profitability of Cohu, Inc..

Analyzing these profitability ratios over time helps to identify trends and patterns in Cohu, Inc.'s financial performance. For example, consistent improvement in the gross profit margin may indicate better cost control or increased pricing power. Declining operating profit margins might signal rising operating expenses or increased competition.

A comparison of Cohu, Inc.'s profitability ratios with industry averages provides context for evaluating its performance. If Cohu, Inc.'s margins are consistently higher than the industry average, it may indicate a competitive advantage. Conversely, lower margins could suggest areas for improvement.

Operational efficiency plays a significant role in Cohu, Inc.'s profitability. Effective cost management directly impacts the gross profit margin, while efficient management of operating expenses influences the operating profit margin. Monitoring gross margin trends can reveal whether Cohu, Inc. is successfully controlling its production costs and maintaining its pricing power.

Here's a hypothetical table illustrating how Cohu, Inc.'s profitability metrics might be presented and analyzed:

In this example, Cohu, Inc. shows improving profitability margins across all metrics from 2022 to 2024. Additionally, its 2024 margins are higher than the industry average, suggesting strong financial performance and operational efficiency.

Cohu, Inc. (COHU) Debt vs. Equity Structure

Understanding how Cohu, Inc. (COHU) finances its operations and growth is crucial for investors. This involves analyzing the company's debt levels, its debt-to-equity ratio, and its approach to balancing debt and equity funding. Let's delve into these key aspects.

A review of Cohu, Inc.'s debt levels provides insight into its financial strategy. This includes both short-term liabilities (due within a year) and long-term debt (due beyond a year). As of fiscal year 2024, details regarding Cohu's specific debt figures can be obtained from their financial statements, including their balance sheets found in their annual and quarterly reports filed with the Securities and Exchange Commission (SEC). These reports will offer precise numbers for both short-term and long-term debt, reflecting the company's obligations.

The debt-to-equity ratio is a critical metric for evaluating Cohu, Inc.'s financial leverage. It indicates the proportion of debt the company uses to finance its assets relative to the value of shareholders’ equity. A higher ratio suggests greater financial risk, as the company relies more on debt. The debt-to-equity ratio can be calculated using the formula: Total Liabilities / Shareholders’ Equity. For example, if Cohu's total liabilities are $500 million and shareholders' equity is $250 million, the debt-to-equity ratio would be 2.0. To assess whether Cohu's ratio is high or low, it should be compared against industry averages and its competitors. Here's a general guideline:

• Below 1.0: Generally considered healthy, indicating lower risk.
• Between 1.0 and 2.0: Moderate risk.
• Above 2.0: Potentially high risk, warranting closer scrutiny.

Recent activities such as debt issuances, credit ratings, or refinancing provide additional context. If Cohu, Inc. has recently issued new debt, it could be to fund acquisitions, capital expenditures, or to refinance existing debt at more favorable terms. Credit ratings from agencies like Standard & Poor's, Moody's, and Fitch reflect their assessment of Cohu's creditworthiness. Upgrades or downgrades in these ratings can significantly impact the company's borrowing costs and investor confidence. Refinancing activities might involve replacing older, higher-interest debt with new debt at lower interest rates, improving cash flow.

Balancing debt and equity is crucial for sustainable growth. Cohu, Inc. must strategically manage its capital structure to optimize financial flexibility and minimize risk. Too much debt can increase financial risk and limit the company's ability to invest in future growth opportunities. Relying solely on equity might reduce financial risk but could dilute existing shareholders' ownership and potentially increase the cost of capital. The ideal balance depends on various factors, including the company's growth prospects, industry dynamics, and overall economic conditions.

Here is a sample table illustrating how debt and equity might appear in a company's financial structure:

Understanding these elements helps investors assess Cohu, Inc.’s financial strategy and its potential impact on the company’s performance. For further insights, explore Breaking Down Cohu, Inc. (COHU) Financial Health: Key Insights for Investors.

Cohu, Inc. (COHU) Liquidity and Solvency

Assessing a company's financial health requires a close look at its liquidity and solvency. These metrics reveal its ability to meet short-term obligations and long-term liabilities. Here's a breakdown of Cohu, Inc.'s liquidity position:

Assessing Cohu, Inc.'s Liquidity:

• Current and Quick Ratios: These ratios provide a snapshot of Cohu's ability to cover its short-term liabilities with its current assets.

Cohu's current ratio as of December 2024 is 6.27, and its quick ratio is 4.61. A current ratio above 1 indicates that the company has more current assets than current liabilities, suggesting good liquidity. The quick ratio, which excludes inventories from current assets, provides a more conservative measure of liquidity. For comparison, the current ratio was 6.18 in December 2023, 4.75 in December 2022, 3.90 in December 2021 and 2.78 in December 2020.

• Analysis of Working Capital Trends: Working capital, the difference between current assets and current liabilities, is a fundamental measure of a company's short-term financial health.

Cohu Inc.'s net current asset value is reported as $391.78 million as of December 2024, compared to $438.64 million in December 2023, $466.28 million in December 2022, and $374.25 million in December 2021.

However, it is important to note that Cohu's other working capital declined by €37.5 million from December 2023 to December 2024.

• Cash Flow Statements Overview: Analyzing cash flow trends reveals how well Cohu generates cash from its operations, investments, and financing activities.

Here's an overview of Cohu's cash flow activities for the fiscal year 2024 (in thousands of USD):

Operating cash flow was $2.778 million for fiscal year 2024, a significant decrease compared to $101.47 million in 2023, $112.861 million in 2022 and $97.915 million in 2021. This indicates a potential concern, as operating cash flow is crucial for sustaining business operations and growth.

Investing cash flow was $21.916 million for fiscal year 2024, compared to -$30.210 million in 2023, -$67.871 million in 2022 and $39.893 million in 2021. Financing cash flow was -$59.035 million for fiscal year 2024, compared to -$68.137 million in 2023, -$91.069 million in 2022 and $6.526 million in 2021.

The end cash position for fiscal year 2024 was $206.407 million, compared to $245.524 million in 2023, $242.341 million in 2022 and $290.201 million in 2021.

• Potential Liquidity Concerns or Strengths:

Despite a revenue decline of approximately 37% over the past year, Cohu maintains a strong liquidity position, as reflected in its current ratio of 6.27. However, the company faces persistent market challenges, with its stock price remaining near a 52-week low of $12.57. The company's cash and investments totaled $262.1 million at the end of Q4 2024.

While S&P Global Ratings withdrew all of its ratings on Cohu Inc. at the issuer's request on April 12, 2024, previously, the company had been upgraded to 'BB-' on strong operating performance and low leverage. However, it's important to note that disruptions in Cohu's supply chain and manufacturing operations due to the COVID-19 pandemic had previously led to concerns about a decline in earnings and cash flows, as well as a risk of liquidity weakness.

To gain more insights into Cohu, Inc. and its investors, check out Exploring Cohu, Inc. (COHU) Investor Profile: Who’s Buying and Why?.

Cohu, Inc. (COHU) Valuation Analysis

Assessing whether Cohu, Inc. (COHU) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst opinions. This detailed examination provides investors with a clearer perspective on the company's current market position.

Several financial ratios are crucial in determining valuation:

• Price-to-Earnings (P/E) Ratio: This ratio indicates how much investors are willing to pay for each dollar of Cohu’s earnings. A lower P/E ratio might suggest undervaluation, while a higher ratio could indicate overvaluation relative to its peers or historical averages.
• Price-to-Book (P/B) Ratio: The P/B ratio compares Cohu’s market capitalization to its book value of equity. A lower P/B ratio can suggest that the stock is undervalued, as it implies the market is valuing the company at less than its net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio compares Cohu’s enterprise value (total market value plus debt, minus cash) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). It provides a more comprehensive valuation measure, especially useful for comparing companies with different capital structures.

Analyzing Cohu, Inc.'s stock price trends over the past year offers insights into market sentiment and investor confidence. Significant price appreciation could suggest growing optimism, while a declining price might indicate concerns about the company's future prospects.

Here's a look at Cohu, Inc.'s recent stock performance:

• As of April 18, 2025, Cohu Inc.'s stock price is $42.10.
• The 52-week high is $44.72, and the 52-week low is $23.49.

Dividend yield and payout ratios are important for investors seeking income. However, it should be noted that Cohu, Inc. does not currently offer a dividend. Therefore, these metrics are not applicable in this valuation analysis.

Analyst consensus provides a summarized view of expert opinions on Cohu’s stock. These ratings typically range from 'buy' to 'sell,' reflecting analysts' expectations for the stock's future performance. For example:

As of April 2025, the analyst consensus on Cohu, Inc. is:

• The consensus rating is 'Hold'.
• The average target price is $38.50.

To provide a clearer picture, a summary of key valuation metrics is presented below:

These metrics, combined with stock performance data and analyst ratings, enable investors to make well-informed decisions about Cohu, Inc.'s valuation. For further insights into the investors of Cohu, Inc., consider reading Exploring Cohu, Inc. (COHU) Investor Profile: Who’s Buying and Why?.

Cohu, Inc. (COHU) Risk Factors

Investing in Cohu, Inc. (COHU) involves understanding several key risks that could impact its financial health. These risks span both internal and external factors, requiring investors to stay informed about potential challenges and mitigation strategies. Here's an overview:

Industry Competition: The semiconductor equipment industry is intensely competitive. Cohu faces competition from both larger, more diversified companies and smaller, specialized firms. This competition can lead to pricing pressures, reduced profit margins, and the need for continuous innovation to maintain market share. For example, competitors might introduce products with similar functionality at lower prices, impacting Cohu's revenue and profitability. According to the 2024 Form 10-K, Cohu's ability to compete depends on factors such as product performance, innovation, customer support, and pricing. Mission Statement, Vision, & Core Values of Cohu, Inc. (COHU).

Regulatory Changes: Changes in regulations, particularly those related to international trade, tariffs, and export controls, can significantly affect Cohu's operations. Given Cohu's global presence, trade restrictions or tariffs can increase costs, disrupt supply chains, and reduce access to key markets. Monitoring regulatory developments and adapting business strategies accordingly is crucial for mitigating these risks.

Market Conditions: The cyclical nature of the semiconductor industry exposes Cohu to fluctuations in demand and capital spending by semiconductor manufacturers. Economic downturns or overcapacity in the semiconductor market can lead to decreased orders and lower revenues. Diversifying product offerings and customer base can help cushion the impact of these market cycles. Cohu's 2024 Form 10-K highlights the dependence on capital spending in the semiconductor industry as a key factor influencing its financial performance.

Operational Risks: Operational risks include potential disruptions in the supply chain, manufacturing inefficiencies, and quality control issues. Any of these factors can lead to increased costs, delays in product delivery, and damage to Cohu's reputation. Implementing robust supply chain management practices and quality control processes is essential for minimizing these risks. Cohu's reliance on a limited number of suppliers for certain components also poses a risk, as disruptions could impact production timelines and costs.

Financial Risks: Financial risks include fluctuations in currency exchange rates, interest rate volatility, and the ability to manage debt levels. Currency fluctuations can impact the value of international sales and increase costs. Rising interest rates can increase the cost of borrowing, affecting Cohu's profitability. Prudent financial management and hedging strategies can help mitigate these risks. As of the latest earnings report in 2024, Cohu's debt-to-equity ratio and interest coverage provide insights into its financial risk profile.

Strategic Risks: Strategic risks involve the ability to innovate, adapt to changing technologies, and execute strategic initiatives effectively. Failure to anticipate market trends or make timely investments in new technologies can weaken Cohu's competitive position. Effective strategic planning and execution are critical for long-term success. The semiconductor equipment industry is characterized by rapid technological advancements, requiring Cohu to continuously invest in research and development to stay ahead of the curve.

Mitigation Strategies: Cohu employs various strategies to mitigate these risks, including:

• Diversifying its product portfolio to reduce dependence on specific market segments.
• Expanding its customer base to minimize the impact of fluctuations in demand from individual customers.
• Investing in research and development to maintain a competitive edge in technology.
• Implementing robust supply chain management practices to ensure continuity of supply.
• Employing hedging strategies to manage currency and interest rate risks.

Recent earnings reports and filings provide additional details on specific risks and mitigation efforts. For instance, the 2024 annual report outlines key risk factors in detail, offering investors valuable insights into the challenges and opportunities facing Cohu, Inc. (COHU).

Understanding these risks is essential for investors to make informed decisions about Cohu, Inc. (COHU). By carefully evaluating the potential challenges and the company's mitigation strategies, investors can better assess the risk-reward profile of investing in Cohu.

Cohu, Inc. (COHU) Growth Opportunities

Cohu, Inc. (COHU) is positioned for future growth through several key drivers. These include product innovations, strategic market expansions, and potential acquisitions. These factors collectively contribute to revenue growth and improved earnings estimates.

Key growth drivers for Cohu, Inc. (COHU) include:

• Product Innovations: Development and launch of new testing and handling solutions that cater to advanced technology nodes and applications.
• Market Expansions: Increasing its presence in growing markets such as automotive, 5G, and advanced packaging.
• Acquisitions: Strategic acquisitions to expand product portfolios and enter new markets.

Future revenue growth projections and earnings estimates highlight the company's potential. Strategic initiatives and partnerships are also expected to play a crucial role in driving future growth.

Strategic advantages that position Cohu, Inc. (COHU) for growth:

• Technological Leadership: Maintaining a competitive edge through innovative technology and solutions.
• Diversified Product Portfolio: Offering a wide range of products that cater to various segments of the semiconductor industry.
• Strong Customer Relationships: Building and maintaining strong relationships with key customers.

These elements combined provide a foundation for sustained growth and market leadership. For more insights into the company's guiding principles, check out Mission Statement, Vision, & Core Values of Cohu, Inc. (COHU).

To provide a clearer picture of Cohu, Inc.'s (COHU) financial standing, here's a summary of key financial data based on the 2024 fiscal year:

These figures provide a snapshot of Cohu, Inc.'s (COHU) financial performance and investments in innovation, which are crucial for sustaining its competitive advantage and driving future growth.