Since August 2025, Himax has been in a holding pattern, posting a small loss of 0.6% while floating around $7.72. The stock also fell short of the S&P 500’s 6.2% gain during that period.

Is there a buying opportunity in Himax, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.

Why Do We Think Himax Will Underperform?

We're swiping left on Himax for now. Here are three reasons you should be careful with HIMX and a stock we'd rather own.

1. Revenue Spiraling Downwards

Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Himax’s demand was weak and its revenue declined by 1.3% per year. This wasn’t a great result and is a sign of poor business quality. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

2. Low Gross Margin Reveals Weak Structural Profitability

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.

Himax’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 30.5% gross margin over the last two years. That means Himax paid its suppliers a lot of money ($69.49 for every $100 in revenue) to run its business.

3. Shrinking Operating Margin

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.

Analyzing the trend in its profitability, Himax’s operating margin decreased by 29.9 percentage points over the last five years. Himax’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. Its operating margin for the trailing 12 months was 5.3%.

Final Judgment

We cheer for all companies solving complex technology issues, but in the case of Himax, we’ll be cheering from the sidelines. With its shares lagging the market recently, the stock trades at 31.7× forward P/E (or $7.72 per share). At this valuation, there’s a lot of good news priced in - we think there are better stocks to buy right now. We’d suggest looking at one of Charlie Munger’s all-time favorite businesses.

Stocks We Like More Than Himax

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.