Published on 18 Dec 2023 on Simply Wall St. via Yahoo Finance

There's Reason For Concern Over Silicon Laboratories Inc.'s (NASDAQ:SLAB) Massive 33% Price Jump

Silicon Laboratories Inc. (NASDAQ:SLAB) shareholders would be excited to see that the share price has had a great month, posting a 33% gain and recovering from prior weakness. While recent buyers may be laughing, long-term holders might not be as pleased since the recent gain only brings the stock back to where it started a year ago.

Following the firm bounce in price, Silicon Laboratories may be sending very bearish signals at the moment with a price-to-earnings (or "P/E") ratio of 69.9x, since almost half of all companies in the United States have P/E ratios under 16x and even P/E's lower than 9x are not unusual. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so lofty.

With earnings that are retreating more than the market's of late, Silicon Laboratories has been very sluggish. One possibility is that the P/E is high because investors think the company will turn things around completely and accelerate past most others in the market. If not, then existing shareholders may be very nervous about the viability of the share price.