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Why SanDisk (SNDK) Stock Is Up Today

NEW YORK (TheStreet) -- SanDisk (SNDK - Get Report) stock is climbing Monday on the news it has agreed to acquire Fusion-io (FIO) in a deal worth $1.1 billion. The all-cash offer of $11.25 a share represents a 21.2% premium to Friday's close of $9.28.

The offer is expected to close during SanDisk's third quarter and will be accretive in the second half of fiscal 2015. 

By early afternoon, shares had added 3.2% to $101.60. Fusion-io shares were soaring 22.8% to $11.40.

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TheStreet Ratings team rates SANDISK CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate SANDISK CORP (SNDK) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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

  • The revenue growth came in higher than the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 12.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although SNDK's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average. To add to this, SNDK has a quick ratio of 1.89, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SANDISK CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SANDISK CORP increased its bottom line by earning $4.37 versus $1.69 in the prior year. This year, the market expects an improvement in earnings ($6.00 versus $4.37).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Computers & Peripherals industry. The net income increased by 61.8% when compared to the same quarter one year prior, rising from $166.23 million to $268.95 million.
  • The gross profit margin for SANDISK CORP is rather high; currently it is at 54.96%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 17.78% trails the industry average.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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