NEW YORK (TheStreet) -- Silicon Motion Technology (SIMO) rose 15.99% to $17.26 on Tuesday after the microchip developer announced its adjusted results for the fourth quarter beat analysts' expectations.
The preliminary results released approximately three weeks ago indicated $52 million in net sales and gross margins between 48% and 49%, but the updated results specified net sales of $52.5 million, a 26% year-over-year decrease. Non-GAAP gross margins came in at 48.8%, just as it did in the third quarter, and up from 44.6% in the same period one year earlier.
Adjusted earnings per share were 30 cents per American depositary share, down from 36 cents per ADS in the same period one year ago; despite the declines, the numbers beat analysts expectations of an adjusted EPS of 21 cents per ADS on $51.8 million in revenue.
TheStreet Ratings team rates SILICON MOTION TECH -ADR as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:"We rate SILICON MOTION TECH -ADR (SIMO) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and expanding profit margins. 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:
- SIMO 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 4.45, which clearly demonstrates the ability to cover short-term cash needs.
- 48.69% is the gross profit margin for SILICON MOTION TECH -ADR which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 16.76% trails the industry average.
- The revenue fell significantly faster than the industry average of 5.0%. Since the same quarter one year prior, revenues fell by 25.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- SILICON MOTION TECH -ADR's earnings per share declined by 37.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SILICON MOTION TECH -ADR increased its bottom line by earning $1.40 versus $1.24 in the prior year. For the next year, the market is expecting a contraction of 30.4% in earnings ($0.98 versus $1.40).
- You can view the full analysis from the report here: SIMO Ratings Report
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