DIOD · Diodes
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a weekly close below $75.00
Note written ·
Price against the kill line
16.3% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it (a weekly close, on a weekly line) would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a weekly close below $75.00, on record since 10 November 2026; only a weekly close settles it. The shares are down 18.9% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A weekly close below $75.00, under the 6 November 2026 close of $77.36, which would show the post-report rebound failing. Fourth-quarter revenue below about $533.5 million, the low end of the guide, would also break the case.
Research onlyNot in the portfolio.
The business · as of
Diodes designs and sells discrete, analog and mixed-signal semiconductors to automotive, industrial, computing, communications and consumer customers. Revenue was $533 million in the quarter to 30 September 2026, up 35.8% from a year earlier (10-Q filed 5 November 2026).
What is changing, and what follows · as of
- What is changing now
- On 5 November 2026 Diodes reported third-quarter revenue of $532.6 million, up 35.8% from a year earlier, and guided the fourth quarter to about $550 million, plus or minus 3%.
- What follows for the company
- Gross margin rose to 36.1% from 30.7% a year earlier and operating margin to 11.9% from 3.0%. ElevATE Semiconductor, acquired on 27 August 2026, adds goodwill and integration work.
- What follows for its customers, suppliers and competitors
- Peers ON Semiconductor (ON), Vishay (VSH), STMicroelectronics (STM) and Texas Instruments (TXN) compete in the same discrete and analog markets; Diodes' guide shows demand improving in its end markets.
What the price assumes · as of
At the 13 November 2026 close (filed inputs to 5 November 2026) the shares trade at 34.5 times earnings and 2.1 times sales, for an enterprise value of $3,806 million; that holds only if revenue keeps growing near the 35.8% of the latest quarter while operating margin stays near 11.9%.
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 5 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 533
- Revenue, change on a year (%)
- +35.8
- Gross margin (%)
- 36.1
- Operating margin (%)
- 11.9
- Free cash flow, four quarters ($M)
- 124
- Net cash, cash less debt ($M)
- 181
- Price to earnings (×)
- 34.5
- Enterprise value to sales (×)
- 2.1
All filed numbers
What Diodes reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 533 | +35.8 | 36.1 | 11.9 |
| first filed | 446 | +21.7 | 33.1 | 7.5 |
| first filed | 406 | +22.1 | 31.8 | 4.9 |
| first filed | 392 | +15.4 | 31.1 | 3.4 |
| first filed | 392 | +12.0 | 30.7 | 3.0 |
| first filed | 366 | +14.5 | 31.5 | 2.6 |
| Pre-tax income ($M) | 63.0 |
| Net income ($M) four quarters: 116 | 43.7 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | −0.4 |
| Operating cash flow ($M) | 268 |
| Capital spending ($M) | 144 |
| Free cash flow ($M) | 124 |
| Cash and short-term investments ($M) | 575 |
| Debt ($M) long-term debt | 394 |
| Net cash, cash less debt ($M) | 181 |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 348 |
| Inventory ($M) | 535 |
| Shareholders' equity ($M) | 1,949 |
| Market value ($M) | 3,987 |
| Enterprise value, market value plus net debt ($M) | 3,806 |
| Enterprise value to sales (×) | 2.1 |
| Enterprise value to operating income (×) | 29.4 |
| Price to earnings (×) | 34.5 |
| Price to book value (×) | 2.0 |
| Free-cash-flow yield (%) | 3.1 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 5.6% of shares outstanding sold short, 5.0 days of average trading to cover, +1.2% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $0 | $16.5M |
Linked companies · as of
The thesis
Diodes Incorporated is more likely to lead than lag the S&P 500 over the next three months, because third-quarter revenue rose 35.8% from a year earlier and the company guided the fourth quarter higher still. The fourth-quarter report, expected around mid-February 2027, settles whether revenue and margin gains hold.
Diodes reported on 5 November 2026. Revenue was $532.6 million against a guide of about $510 million, plus or minus 3%, and gross margin reached 36.1% (third-quarter release, Form 8-K exhibit 99.1). The company guided the fourth quarter to about $550 million, plus or minus 3%.
The shares closed at $87.25 on 13 November 2026, down from $91.60 on 12 November 2026 and below both the 50-day average of $89.98 and the 200-day average of $89.19. The three-month change is −18.9%, measured from the $107.56 close of 17 August 2026. The last close is 30.7% below the 52-week intraday high of $125.99 set on 22 June 2026. The price has recovered part of the post-report drop but not the earlier peak.
Bullish and bearish views on Diodes Incorporated
The bull case on Diodes Incorporated (DIOD), in brief: revenue growth has accelerated for four quarters. The bear case: sequential growth is guided to slow.
Bull case
- Revenue growth has accelerated for four quarters. Quarterly revenue rose from $366 million in the quarter to 30 June 2025 to $533 million in the quarter to 30 September 2026, with year-over-year growth moving from 14.5% to 35.8% (10-Q filed 5 November 2026).
- Margins are widening fast. Gross margin was 36.1% in the quarter to 30 September 2026, against 30.7% a year earlier. Operating margin was 11.9%, against 3.0% a year earlier (10-Q filed 5 November 2026).
- The fourth-quarter guide is above the third-quarter result. Diodes guided revenue of about $550 million, non-GAAP gross margin of 37.0%, plus or minus 1%, and non-GAAP earnings per share of $1.35, plus or minus $0.10 (third-quarter release, 5 November 2026). Non-GAAP figures exclude acquisition and non-cash items.
- The company holds net cash. Cash and short-term investments were $575 million against $394 million of long-term debt at 30 September 2026, a net cash position of $181 million. Free cash flow over the four quarters to that date was $124 million (10-Q filed 5 November 2026).
- An analyst target sits above the price. Needham kept its Buy rating and lowered its target to $100 on 6 November 2026 (company news headline), above the $87.25 close of 13 November 2026.
Bear case
- Sequential growth is guided to slow. The fourth-quarter midpoint of $550 million is 3.2% above the third quarter's $532.6 million, against 19.5% growth from the second quarter. Part of the third-quarter jump came from the first partial quarter of ElevATE Semiconductor, which closed on 27 August 2026 (third-quarter release).
- GAAP earnings trail the adjusted figure. GAAP diluted earnings per share were $0.95 against $1.18 non-GAAP, and below the $1.00 of the second quarter (third-quarter release, 5 November 2026).
- Inventory and receivables are large. Inventory was $535 million and receivables $348 million at 30 September 2026 (10-Q filed 5 November 2026). A demand slowdown would leave a lot of product to work through at a time when gross margin gains depend on factory utilization.
- Analysts are trimming targets. Needham lowered its target to $100 on 6 November 2026 and Truist adjusted its target the same day (company news headlines).
- The multiples already assume continued growth. The P/E of 34.5 and EV/EBIT of 29.4 at the 13 November 2026 close follow a year in which operating margin rose from 3.0% to 11.9%; a stall in either revenue or margin would leave those multiples exposed.
Price setup
The shares closed at $77.36 on 6 November 2026, the first session after the report, then at $85.89 on 9 November 2026, $86.73 on 10 November 2026, $91.27 on 11 November 2026 and $91.60 on 12 November 2026. The $91.60 close is the post-report high in that run. The $87.25 close of 13 November 2026 gave back part of it and sits under both the 50-day average of $89.98 and the 200-day average of $89.19.
The levels the case turns on are the two averages just overhead, near $89 to $90, and the 6 November 2026 close of $77.36 below. Higher up, the 52-week intraday high is $125.99 (22 June 2026); the 52-week closing low is $42.36 (20 November 2025).
The next scheduled event is the fourth-quarter report, expected around mid-February 2027 and estimated from the 11 February 2026 date of the previous year's fourth-quarter report. No earnings report falls inside the next 30 days.
Catalysts ahead
- ~11 February 2027 (est.): Fourth-quarter 2026 results and call, estimated from the 11 February 2026 date of the previous fourth-quarter report. Tests the $550 million revenue and 37.0% non-GAAP gross-margin guides and the second quarter of ElevATE Semiconductor contribution.
What would change the view
A weekly close below $75.00, under the 6 November 2026 close of $77.36, which would show the post-report rebound failing. Fourth-quarter revenue below about $533.5 million, the low end of the guide, would also break the case.
The risks this note tracks, each with what would confirm it:
- Sequential growth slows sharply after the third-quarter jump and the quarter proves a cyclical peak. Confirmed by: fourth-quarter revenue below about $533.5 million, the low end of the guide, or weaker order commentary in automotive or AI-server markets.
- Gross margin gains reverse if factory utilization falls. Confirmed by: Non-GAAP gross margin below 36.0% in the fourth-quarter report, against the 37.0% guide.
- Analyst targets keep falling despite strong results. Confirmed by: more target cuts or downgrades after Needham's cut to $100 on 6 November 2026.
- ElevATE integration and debt weigh on earnings quality. Confirmed by: GAAP earnings per share staying well below non-GAAP, or an impairment charge, in the next filing.
What it trades with
Diodes sells discrete and analog chips into automotive, industrial and computing markets, and its shares trade with analog and discrete semiconductor peers such as ON Semiconductor (ON), Vishay (VSH), STMicroelectronics (STM) and Texas Instruments (TXN). Server and data-center demand adds a link to AI infrastructure spending. Manufacturing in China and Taiwan ties results to tariff and cross-strait policy.
Company news since the report has been product launches: automotive Hall effect current sensors and high-side power switches on 10 November 2026, and new power-conversion technology shown at electronica 2026 on 13 November 2026. Diodes also filed an 8-K on 12 November 2026 covering results of operations and Regulation FD disclosure.
The evidence, claim by claim (6)
- Third-quarter revenue was $532.6 million, up 35.8% from a year earlier and 19.5% from the second quarter. Diodes third-quarter 2026 results release (Form 8-K exhibit 99.1) · as of
- Gross margin was 36.1% in the quarter to 30 September 2026 against 30.7% a year earlier; operating margin was 11.9% against 3.0%. Form 10-Q filed 5 November 2026 · as of
- Diodes guided the fourth quarter to revenue of about $550 million (plus or minus 3%), non-GAAP gross margin of 37.0% (plus or minus 1%) and non-GAAP earnings per share of $1.35 (plus or minus $0.10). Diodes third-quarter 2026 results release (Form 8-K exhibit 99.1) · as of
- Cash and short-term investments were $575 million and long-term debt $394 million at 30 September 2026; free cash flow over four quarters was $124 million. Form 10-Q filed 5 November 2026 · as of
- GAAP diluted earnings per share were $0.95 against non-GAAP earnings per share of $1.18 in the third quarter. Diodes third-quarter 2026 results release · as of
- Needham maintained a Buy rating and lowered its price target to $100. Company news headline · as of
Sources
- DIODES INC /DEL/ - Form 8-K - FY2026 · sec.gov ·
- Diodes Incorporated Reports Third Quarter 2026 Financial Results · diodes.com
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