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Trade-Ideas: Himax Technologies (HIMX) Is Today's "Perilous Reversal" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Himax Technologies ( HIMX) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Himax Technologies as such a stock due to the following factors:

  • HIMX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $84.1 million.
  • HIMX has traded 38.2 million shares today.
  • HIMX is down 3.4% today.
  • HIMX was up 17.3% yesterday.

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More details on HIMX:

Himax Technologies, Inc. designs, develops, and markets semiconductors for flat panel displays. The company operates in two segments, Driver IC and Non-Driver Products. The stock currently has a dividend yield of 3.7%. HIMX has a PE ratio of 19.1. Currently there are 3 analysts that rate Himax Technologies a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Himax Technologies has been 6.9 million shares per day over the past 30 days. Himax has a market cap of $1.1 billion and is part of the technology sector and electronics industry. Shares are up 170% year to date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Himax Technologies as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 13.4%. Since the same quarter one year prior, revenues slightly increased by 9.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HIMX's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.41, which illustrates the ability to avoid short-term cash problems.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, HIMAX TECHNOLOGIES INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 250.56% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HIMX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.

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