The following ratings changes were generated on Wednesday, Nov. 26.
We've downgraded Cypress Semiconductor (CY - Get Report) from hold to sell, driven by its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Cypress Semiconductor's net income has significantly decreased when compared with the same quarter one year ago, falling from $29.82 million to -$24.09 million and significantly underperforming the S&P 500 and the semiconductors and semiconductor equipment industry. Return on equity has also greatly decreased from the same quarter one year prior, a signal of major weakness within the corporation, underperforming the S&P 500 and the industry average.
Cypress has experienced a steep decline in earnings per share of 188.9% in the most recent quarter compared withthe same quarter a year ago. This company has reported somewhat volatile earnings recently, and we feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, it increased its bottom line by earning $2.47 vs. 24 cents in the prior year. For the next year, the market is expecting a contraction of 74.7% in earnings to 63 cents. Its debt-to-equity ratio of 0.3 is low but is higher than the industry average, and its quick ratio of 1.2 is sturdy.Shares are down 88.9% on the year, underperforming the S&P 500. Naturally, the overall market trend is bound to be a significant factor, and in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.