In its fourth quarter Cypress posted earnings of 9 cents a share, beating the Capital IQ Consensus estimates of 8 cents a share by 1 cent. The earnings were at the high end of the company's guidance. Revenue for the semiconductor company fell 11.1% year over year to $167.8 million in the quarter, compared to estimates of $166.65 million.
Cypress had a book-to-bill ratio of 1.08 by the end of 2013, a high point for the company since the first quarter of 2012. The company also said that lead times remain low, and that its distributors decreased inventory to their lowest levels in three years in the fourth quarter.
The company expects revenue to "remain in a seasonal through" in the first quarter of 2014, but to increase through the rest of the year.TheStreet Ratings rates Cypress Semiconductor as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation: "We rate CYPRESS SEMICONDUCTOR CORP (CY) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CY, with its decline in revenue, slightly underperformed the industry average of 0.4%. Since the same quarter one year prior, revenues slightly dropped by 7.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for CYPRESS SEMICONDUCTOR CORP is rather high; currently it is at 57.50%. Regardless of CY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CY's net profit margin of -4.42% significantly underperformed when compared to the industry average.
- CYPRESS SEMICONDUCTOR CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CYPRESS SEMICONDUCTOR CORP swung to a loss, reporting -$0.16 versus $0.89 in the prior year. This year, the market expects an improvement in earnings ($0.38 versus -$0.16).
- The debt-to-equity ratio of 1.37 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, CY has a quick ratio of 0.62, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, CYPRESS SEMICONDUCTOR CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: CY Ratings Report
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