Vishay Intertechnology (VSH)

Semiconductor manufacturer Vishay Intertechnology (NYSE:VSH) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 4.2% year on year to $715.2 million. On the other hand, next quarter’s outlook exceeded expectations with revenue guided to $760 million at the midpoint, or 0.8% above analysts’ estimates. Its non-GAAP loss of $0.03 per share was in line with analysts’ consensus estimates.

Company Overview

Named after the founder's ancestral village in present-day Lithuania, Vishay Intertechnology (NYSE:VSH) manufactures simple chips and electronic components that are building blocks of virtually all types of electronic devices.

Vishay Intertechnology’s peers and competitors include Analog Devices (NASDAQ: ADI) Texas Instruments (NASDAQ: TXN), Skyworks (NASDAQ:SWKS), Infineon (XTRA:IFX), NXP Semiconductors NV (NASDAQ:NXPI), ON Semi (NASDAQ:ON), Marvell Technology (NASDAQ:MRVL), and Microchip (NASDAQ:MCHP).

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Vishay Intertechnology grew its sales at a sluggish 2.8% compounded annual growth rate. This was below our standards and is a rough starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Vishay Intertechnology’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 9.1% annually.

This quarter, Vishay Intertechnology missed Wall Street’s estimates and reported a rather uninspiring 4.2% year-on-year revenue decline, generating $715.2 million of revenue. Adding to the miss, the drop in sales could mean that the current downcycle is deepening. Company management is currently guiding for a 2.5% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 7.3% over the next 12 months. Although this projection implies its newer products and services will catalyze better top-line performance, it is still below the sector average.

Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.

This quarter, Vishay Intertechnology’s DIO came in at 112, which is 18 days above its five-year average, suggesting that the company’s inventory has grown to higher levels than we’ve seen in the past.

Gross profit margin is a key metric to track because it shows how much money a semiconductor company gets to keep after paying for its raw materials, manufacturing, and other input costs.

Vishay Intertechnology’s gross margin is one of the worst in the semiconductor industry, signaling it operates in a competitive market and lacks pricing power. As you can see below, it averaged a 23.6% gross margin over the last two years. Said differently, Vishay Intertechnology had to pay a chunky $76.43 to its suppliers for every $100 in revenue.

Vishay Intertechnology’s gross profit margin came in at 19% this quarter, down 3.9 percentage points year on year. Vishay Intertechnology’s full-year margin has also been trending down over the past 12 months, decreasing by 6.1 percentage points. If this move continues, it could suggest deteriorating pricing power and higher input costs (such as raw materials and manufacturing expenses).

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Vishay Intertechnology was profitable over the last two years but held back by its large cost base. Its average operating margin of 5.4% was weak for a semiconductor business. This result isn’t too surprising given its low gross margin as a starting point.

Analyzing the trend in its profitability, Vishay Intertechnology’s operating margin decreased by 11 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Vishay Intertechnology’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, Vishay Intertechnology’s breakeven margin was down 5.6 percentage points year on year. Since Vishay Intertechnology’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Vishay Intertechnology, its EPS declined by 25.4% annually over the last five years while its revenue grew by 2.8%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

We can take a deeper look into Vishay Intertechnology’s earnings to better understand the drivers of its performance. As we mentioned earlier, Vishay Intertechnology’s operating margin declined by 11 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q1, Vishay Intertechnology reported EPS at negative $0.03, down from $0.22 in the same quarter last year. This print missed analysts’ estimates. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Vishay Intertechnology’s demanding reinvestments have consumed many resources over the last two years, contributing to an average free cash flow margin of negative 3.8%. This means it lit $3.82 of cash on fire for every $100 in revenue.

Taking a step back, we can see that Vishay Intertechnology’s margin dropped by 15.4 percentage points over the last five years. Almost any movement in the wrong direction is undesirable because it is already burning cash. If the trend continues, it could signal it’s becoming a more capital-intensive business.

Vishay Intertechnology burned through $45.47 million of cash in Q1, equivalent to a negative 6.4% margin. The company’s cash flow turned negative after being positive in the same quarter last year, suggesting its historical struggles have dragged on.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Vishay Intertechnology’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 16.5%, slightly better than typical semiconductor business.

Vishay Intertechnology reported $619.6 million of cash and $1.11 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $285.6 million of EBITDA over the last 12 months, we view Vishay Intertechnology’s 1.7× net-debt-to-EBITDA ratio as safe. We also see its $4.56 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Vishay Intertechnology provide revenue guidance for next quarter that slightly beat analysts’ expectations. On the other hand, its EPS missed significantly and its revenue fell slightly short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 1.3% to $13.25 immediately after reporting.

Updated: May 22, 2025 at 10:19 PM EDT

Before deciding whether to buy Vishay Intertechnology or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

We see the value of companies furthering technological innovation, but in the case of Vishay Intertechnology, we’re out. To kick things off, its revenue growth was weak over the last five years. On top of that, Vishay Intertechnology’s declining EPS over the last five years makes it a less attractive asset to the public markets, and its declining operating margin shows the business has become less efficient.

Vishay Intertechnology’s EV-to-EBITDA ratio based on the next 12 months is 6.9x. This valuation tells us a lot of optimism is priced in - you can find better investment opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $13.50 on the company (compared to the current share price of $14.21), implying they don’t see much short-term potential in Vishay Intertechnology.

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

To get the best start with StockStory, check out our most recent stock picks, and then sign up for our earnings alerts by adding companies to your watchlist. We typically have quarterly earnings results analyzed within seconds of the data being released, giving investors the chance to react before the market has fully absorbed the information. This is especially true for companies reporting pre-market.