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Why Power Integrations (POWI) Stock Is Soaring Today

Stocks in this article: POWI

NEW YORK (TheStreet) -- Shares of Power Integrations Inc. (POWI) are higher by 4.28% to $59.66 on very heavy volume in early afternoon trading on Wednesday.

Semiconductor stocks are getting a boost today, following a Bloomberg report suggesting the largest chip maker in Germany, Infineon Technologies AG (IFNNY) , is looking to purchase a U.S. based semiconductor company for close to $2 billion.

Infineon didn't announce which company it is most interested in acquiring, but a Bloomberg report from July suggests the company could be looking closely at Power Integrations, as well as Semtech Corp. (SMTC) , and Fairchild Semiconductor Intl. Inc. (FCS) .

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A purchase agreement may be announced as soon as today, sources told Bloomberg.

Separately, TheStreet Ratings team rates POWER INTEGRATIONS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate POWER INTEGRATIONS INC (POWI) a BUY. This is driven by a number of 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 impressive record of earnings per share growth, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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

  • POWER INTEGRATIONS INC has improved earnings per share by 20.0% 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, POWER INTEGRATIONS INC turned its bottom line around by earning $1.88 versus -$1.21 in the prior year. This year, the market expects an improvement in earnings ($2.55 versus $1.88).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Semiconductors & Semiconductor Equipment industry average. The net income increased by 22.3% when compared to the same quarter one year prior, going from $13.67 million to $16.72 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.0%. Since the same quarter one year prior, revenues slightly increased by 1.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • POWI 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 4.12, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has slightly increased to $26.24 million or 6.49% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -9.88%.
  • You can view the full analysis from the report here: POWI Ratings Report

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