NEW YORK (TheStreet) -- Exar Corporation (Nasdaq:EXAR) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow. Highlights from the ratings report include:
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, EXAR CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to $0.47 million or 90.62% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for EXAR CORP is rather high; currently it is at 55.10%. Regardless of EXAR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EXAR's net profit margin of -55.80% significantly underperformed when compared to the industry average.
- EXAR's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 5.75, which clearly demonstrates the ability to cover short-term cash needs.
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