Maxim Integrated Products (NYSE: MXIM) is rated at BUY with a grade of A. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins, reasonable valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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Highlights from the ratings report include:
- MAXIM INTEGRATED PRODUCTS' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, MAXIM INTEGRATED PRODUCTS reported lower earnings of $1.17 versus $1.61 in the prior year. This year, the market expects an improvement in earnings ($1.75 versus $1.17).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 2.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The gross profit margin for MAXIM INTEGRATED PRODUCTS is rather high; currently it is at 69.90%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 20.52% trails the industry average.
- MXIM's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, MXIM has a quick ratio of 1.82, which demonstrates the ability of the company to cover short-term liquidity needs.
Maxim Integrated Products, Inc. engages in designing, developing, manufacturing, and marketing various linear and mixed-signal integrated circuits worldwide. The company also provides various high-frequency process technologies and capabilities for use in custom designs.You can view the full Maxim Integrated Products Ratings Report or get investment ideas from our investment research center. This is just a list of 5 of 50 stocks! Download a list of all 50 of TheStreet Ratings Tech Picks for 2013 NOW! Editor's Note: 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.