Amabarella produces the system-on-a-chip that powers and processes video for GoPro's cameras. The company is expected to benefit from the IPO later this week.
The chipmaker is also a supplier for Dropcam, which was recently acquired by Google's (GOOG) smart home device maker Nest. The acquisition and Nest's plans to connect smart home devices may also be a factor in Ambarella's gains.
TheStreet Ratings team rates AMBARELLA INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMBARELLA INC (AMBA) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 20.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- AMBA 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 6.32, which clearly demonstrates the ability to cover short-term cash needs.
- The net income growth from the same quarter one year ago has exceeded that of the Semiconductors & Semiconductor Equipment industry average, but is less than that of the S&P 500. The net income increased by 10.9% when compared to the same quarter one year prior, going from $4.74 million to $5.26 million.
- The gross profit margin for AMBARELLA INC is rather high; currently it is at 63.28%. Regardless of AMBA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 12.85% trails the industry average.
- You can view the full analysis from the report here: AMBA Ratings Report