NEW YORK (TheStreet) -- Fairchild Semiconductor International (NYSE:FCS) has been upgraded by TheStreet Ratings from hold to buy. 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. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- FCS's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, FCS has a quick ratio of 2.38, which demonstrates the ability of the company to cover short-term liquidity needs.
- 40.30% is the gross profit margin for FAIRCHILD SEMICONDUCTOR INTL which we consider to be strong. Regardless of FCS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FCS's net profit margin of 3.30% is significantly lower than the same period one year prior.
- FCS, with its decline in revenue, underperformed when compared the industry average of 11.8%. Since the same quarter one year prior, revenues fell by 16.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has decreased to $62.70 million or 32.65% when compared to the same quarter last year. Despite a decrease in cash flow FAIRCHILD SEMICONDUCTOR INTL is still fairing well by exceeding its industry average cash flow growth rate of -78.46%.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, FAIRCHILD SEMICONDUCTOR INTL's return on equity is significantly below that of the industry average and is below that of the S&P 500.
-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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