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Why Apple (AAPL) Is Up Today

NEW YORK (TheStreet) -- Apple (AAPL) rose 0.6% to $536.21 based on reports of record fourth-quarter and yearly revenue for one of its suppliers.

Dialog Semiconductor, a chipmaker that provides power management chips to Apple and other companies, reported preliminary fourth-quarter revenue of $352 million, a 31% increase year over year. The preliminary data beats the company's guidance of $310 million in revenue.

Apple uses Dialog Semiconductor chips in iPhones and iPads. Orders from the Cupertino, Calif.-based company reportedly make up 70% of Dialog Semiconductor's sales, according to Seeking Alpha. More revenue, therefore, likely means more orders from Apple for more iOS devices.

Cirrus Logic (CRUS), a chipmaker and fellow Apple supplier, gained 2.2% to $19.49 on the news.

TheStreet Ratings team rates Apple as a "buy" with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate APPLE INC (AAPL) a BUY. 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and attractive valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AAPL's revenue growth has slightly outpaced the industry average of 2.8%. Since the same quarter one year prior, revenues slightly increased by 4.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Although AAPL's debt-to-equity ratio of 0.14 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.40, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has slightly increased to $9,908.00 million or 8.45% when compared to the same quarter last year. In addition, APPLE INC has also modestly surpassed the industry average cash flow growth rate of 6.76%.
  • 41.78% is the gross profit margin for APPLE INC which we consider to be strong. Regardless of AAPL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AAPL's net profit margin of 20.04% compares favorably to the industry average.
  • APPLE INC' 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, APPLE INC reported lower earnings of $39.63 versus $44.16 in the prior year. This year, the market expects an improvement in earnings ($43.71 versus $39.63).

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