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Why Xilinx (XLNX) Is Up Today

NEW YORK (TheStreet) -- Xilinx  (XLNX) was rising 2.36% to $48.66 on Wednesday following third-quarter earnings report on Tuesday.

Xilinx reported a 70% increase in quarterly profit with sales increases in the company's aerospace, defense and wired communication businesses. The chipmaker's net income climbed to $175.9 million, or 61 cents a share, in the third quarter, up from $103.6 million, or 38 cents a share, in the same period one year earlier. Revenue also rose 15% to $586.8 million.

The 18% revenue increase from the industrial, aerospace and defense sector, which accounted for 37% of third-quarter fiscal 2014 revenues, and 22% year-over-year growth in the broadcast, consumer and automotive sector, which accounted for 16% of third-quarter fiscal 2014 revenues, led to the overall year-over-year net income growth. Revenues from the communications and data center sector, which accounted for 44% of third-quarter fiscal 2014 revenues, increased 9% year over year. 

The $100 million in revenue in the quarter from sales of Xilinx's 28-nanometer Kintex 7 was a particular driving force of the revenues, according to the company's report.

TheStreet Ratings team rates XILINX INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate XILINX INC (XLNX) 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, solid stock price performance, notable return on equity, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

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

  • The revenue growth came in higher than the industry average of 0.4%. Since the same quarter one year prior, revenues rose by 10.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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 30.55% 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, XLNX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • 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, XILINX INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for XILINX INC is currently very high, coming in at 71.81%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.61% is above that of the industry average.
  • Net operating cash flow has increased to $254.94 million or 29.17% when compared to the same quarter last year. In addition, XILINX INC has also vastly surpassed the industry average cash flow growth rate of -24.53%.

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