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Why Vimicro International (VIMC) Stock Is Up Today

Stocks in this article: VIMC

NEW YORK (TheStreet) -- Vimicro International (VIMC) shares are up 9.4% to $3.39 in trading on Monday following the announcement that the company signed a deal with the Chinese First Research Institute of the Ministry of Public Security.

The agreement regards Surveillance Video and Audio Coding (SVAC) compliant chips. 

"The SVAC surveillance standard represents one of the most important achievements in the field of security and surveillance monitoring and it is the only codec specifically designed for security surveillance needs," the company said. "Vimicro has aggressively entered the surveillance market with system-level solutions and semiconductor products to capitalize on China's domestic demand."

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TheStreet Ratings team rates VIMICRO INTL CORP -ADR as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate VIMICRO INTL CORP -ADR (VIMC) 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 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:

  • VIMC's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues rose by 11.1%. 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.
  • VIMC's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, VIMC has a quick ratio of 1.64, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 39.47% is the gross profit margin for VIMICRO INTL CORP -ADR which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, VIMC's net profit margin of 7.53% significantly trails the industry average.
  • VIMICRO INTL CORP -ADR's earnings per share declined by 25.0% 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, VIMICRO INTL CORP -ADR turned its bottom line around by earning $0.05 versus -$0.32 in the prior year. For the next year, the market is expecting a contraction of 380.0% in earnings (-$0.14 versus $0.05).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, VIMICRO INTL CORP -ADR'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: VIMC Ratings Report
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