Cree Inc. Stock Hold Recommendation Reiterated (CREE)
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- The revenue growth greatly exceeded the industry average of 15.7%. Since the same quarter one year prior, revenues rose by 22.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CREE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.64, which clearly demonstrates the ability to cover short-term cash needs.
- Powered by its strong earnings growth of 137.50% and other important driving factors, this stock has surged by 85.66% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- 35.90% is the gross profit margin for CREE INC which we consider to be strong. Regardless of CREE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CREE's net profit margin of 6.34% is significantly lower than the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, CREE INC's return on equity significantly trails that of both the industry average and the S&P 500.
--Written by a member of TheStreet Ratings Staff. Exclusive Offer: Jim Cramer's 'go-to' small/mid-cap guru Bryan Ashenberg only buys stocks he thinks could return 50-100%. See his top picks for 14-days FREE.
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