"The trailing price-to-earnings ratio sits at 56x, and the stock trades at 18x trailing sales. Those numbers would give any retirement-focused investor pause."
"The forward P/E drops to 22x, reflecting the pace at which earnings are growing into the current price. Non-GAAP diluted EPS has moved from $0.25 in Q3 FY2025 to $1.07 in Q3 FY2026."
"Management announced three new market expansions in Q3: ZeroFlap optics, Active Line Cards, and OmniConnect memory solutions, each targeting what CEO Bill Brennan called 'multi-billion dollar TAM expansions.'"
"Three risks deserve direct attention. First, gross margin is compressing. Q4 guidance puts non-GAAP gross margin at a lower percentage than previous quarters."
Credo Technology's stock has surged 212% over the past year, raising questions about its future potential. While the current valuation appears high with a trailing P/E of 56x, the forward P/E of 22x suggests strong earnings growth. Revenue increased by 201.5% year over year, and management announced new market expansions. Q4 FY2026 guidance indicates continued revenue growth. However, risks include compressing gross margins and the need for careful entry points for potential investors.
Read at 24/7 Wall St.
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