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Why Inphi (IPHI) Is Rising Today

NEW YORK (TheStreet) -- Inphi  (IPHI) was rose 12% to $12.84 Tuesday after the semiconductor company posted quarterly results and a first-quarter guidance that beat analyst estimates.

In the quarter that ended in December, Inphi posted earnings of 8 cents a share. Analysts surveyed by Thomson Reuters expected earnings of 5 cents a share. The company also beat analyst estimates on revenue, posting $29.1 million for the quarter, compared to estimates of $28.8 million.

"With a strong showing in the fourth quarter, we closed out a healthy 2013 -- exceeding the $100 million threshold in revenue," Inphi president and CEO Ford Tamer said in a press release.

The company also issues a first-quarter guidance that surpasses analyst estimates. Inphi expects earnings of between 8 cents and 10 cents a share in the first quarter, with revenue between $30 million and $32 million. Analysts estimate earnings of 6 cents a share and revenue of $29.5 million for the quarter.

TheStreet Ratings team rates INPHI CORP as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate INPHI CORP (IPHI) 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. 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 and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."

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

  • IPHI's revenue growth has slightly outpaced the industry average of 4.4%. Since the same quarter one year prior, revenues slightly increased by 7.5%. 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.
  • IPHI 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 9.77, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for INPHI CORP is currently very high, coming in at 70.38%. 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 -10.37% is in-line with the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 161.6% when compared to the same quarter one year ago, falling from -$1.06 million to -$2.76 million.
  • 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, INPHI CORP's return on equity significantly trails that of both the industry average and the S&P 500.
 

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