Cohu: Maintaining Bearish Stance Post Q4 Earnings Release

Why It Matters

The continued losses and new debt limit Cohu’s ability to capitalize on recurring revenue growth, potentially depressing share value. Investors must weigh the upside of revenue momentum against heightened dilution and bearish technical signals.

Key Takeaways

• Q4 recurring bookings up 34%, revenue grew 12%.
• Earnings missed estimates, company posted operating loss.
• Gross margin hit by inventory charges, SG&A high.
• $290M convertible debt adds dilution risk.
• Technicals keep stock in bearish trend.

Pulse Analysis

Cohu’s Q4 results illustrate the tension between strong top‑line momentum and lingering profitability challenges. A 34% jump in recurring bookings signals robust demand for its semiconductor test equipment, while revenue growth exceeding 12% reflects a broader industry upswing. However, the company’s operating loss and stagnant margins underscore the difficulty of translating sales growth into earnings, especially when one‑off inventory write‑downs and elevated SG&A expenses erode gross profitability.

The infusion of $290 million in convertible debt adds a new layer of financial risk. While the capital can fund ongoing R&D and working‑capital needs, the conversion feature threatens shareholder dilution and raises the cost of capital. Coupled with a gross margin pressured by inventory adjustments, the balance sheet now carries higher leverage, which may limit Cohu’s flexibility to invest in growth initiatives without further equity issuance or debt refinancing.

From a market‑technical perspective, Cohu’s price action remains entrenched in a bearish trend, with moving averages and momentum indicators pointing to continued downside potential. For investors, the key question is whether the recurring revenue tailwinds can eventually offset the debt burden and margin compression. In a sector where capital efficiency and cash flow generation are prized, Cohu must demonstrate sustainable profitability improvements to shift sentiment and justify a valuation uplift.

Cohu: Maintaining Bearish Stance Post Q4 Earnings Release

Feb. 16, 2026 9:30 AM ET · Individual Trader

Summary

• Cohu, Inc. remains under a bearish rating due to persistent operating losses, fresh convertible debt, and unfavorable technical signals.

• Despite a 34 % spike in recurring bookings and 60 % recurring revenue in Q4, COHU reported negative earnings and missed consensus bottom‑line estimates.

• Operating margins remain unimproved despite 12 %+ revenue growth, with gross margin pressured by one‑time inventory charges and high SG&A costs.

• Recent $290 M convertible debt raises dilution and downside risk, while long‑term technicals confirm COHU remains in a bear market.

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Intro

To be fair to Cohu, Inc. (COHU), the stock has had an excellent 10 months or so, reporting impressive gains after dropping below $13 a share in March of last year. Our commentary on Cohu over

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About the Author

Individual investor with a keen interest in deriving income from investment setups. We do this by buying undervalued profitable stocks with strong balance sheets & minimal debt. Furthermore, when the opportunity arises, we like to write calls against our positions to bring in additional income. Risk management is controlled through position sizing & the use of trailing stop losses over time.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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