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Diodes Earnings Recovery Is Real but the Valuation Calls for Patience

Writer: Brigette Mwaura
Brigette Mwaura
12 hours ago
8 min read

Summary

  • I am downgrading Diodes from a STRONG BUY to a HOLD. The operating evidence is better, but the old claim of asymmetric valuation upside no longer survives a disciplined present-value test. Q2 revenue rose 21.7% y/y to $445.5Mn, gross margin reached 33.1%, and adjusted EPS of $0.70 beat the $0.63 consensus by $0.07. 


  • The margin recovery thesis strengthened. Computing, automotive, and industrial produced 72% of product revenue, while Q3 guidance calls for $510Mn of revenue, 35.0% gross margin, and $1.05 of adjusted EPS.


  • My base case is $2.154Bn of 2027 revenue and $5.25 of adjusted EPS. A 20x multiple discounted at 10% to September 21, 2026 produces a $93 target, only 1.8% above the current price.

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Blue semiconductor chip labeled DIODES Incorporated and ELEVATE Semiconductor against a glowing circuit-board background
Elevate semiconductor is now part of Diodes. Source: Diodes

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