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Why Kulicke & Soffa (KLIC) Is Up Today

NEW YORK (TheStreet) -- Kulicke & Soffa Industries  (KLIC) rose 11.39% to $12.03, up $1.23 from its previous close of $10.80, at the close of the trading day on Tuesday after the semiconductor assembly equipment manufacturer reported its first-quarter earnings results.

The stock hit a high of $12.07 and a low of $11.29 for the day on volume of 2,367,032, well above its average of 870,777. It has a one-year high of $13.70 and a one-year low of $10.08.

Kulicke & Soffa reported net revenue of $79.1 million for the quarter that ended on Dec. 28, 2013. That represents a 30.6% increase from the same period a year earlier and a 54.4% increase from the fourth quarter. Gross profit was $38.4 million, a 25.5% year-over-year increase and a 52.5% increase from the fourth quarter. Diluted earnings per share was 3 cents, a 160% increase from the same period one year earlier and a 107.7% increase from the fourth quarter.

The company also reported that it expects net revenue for the second quarter, which ends on March 29, to fall in the range of approximately $110 million to $120 million.

"According to Gartner and VLSI Research, 2014 and 2015 semiconductor unit growth forecasts are anticipated to significantly outpace the prior two calendar years," said president and CEO Bruno Guilmart in the company's statement. This positive market outlook combined with our operational model, growing balance sheet, core market strength and ongoing investments in advanced packaging allows us to look ahead with continued optimism."

TheStreet Ratings team rates KULICKE & SOFFA INDUSTRIES as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate KULICKE & SOFFA INDUSTRIES (KLIC) a BUY. This is driven by a few notable strengths, 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 somewhat weak growth in earnings per share."

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

  • KLIC 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 8.89, which clearly demonstrates the ability to cover short-term cash needs.
  • 47.57% is the gross profit margin for KULICKE & SOFFA INDUSTRIES 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 17.01% 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 35.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The share price of KULICKE & SOFFA INDUSTRIES has not done very well: it is down 10.74% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • You can view the full analysis from the report here: KLIC Ratings Report

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