Semtech (SMTC) Marked As A Dead Cat Bounce Stock
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
(
) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Semtech as such a stock due to the following factors:
- SMTC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.0 million.
- SMTC has traded 767,005 shares today.
- SMTC is up 3.2% today.
- SMTC was down 10.2% yesterday.
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More details on SMTC:
Semtech Corporation and its subsidiaries design, develop, manufacture, and market analog and mixed signal semiconductor products. Currently there are 3 analysts that rate Semtech a buy, no analysts rate it a sell, and 2 rate it a hold.
The average volume for Semtech has been 347,600 shares per day over the past 30 days. Semtech has a market cap of $2.0 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.28 and a short float of 2.7% with 2.51 days to cover. Shares are down 4.6% year-to-date as of the close of trading on Thursday.
Analysis:
rates Semtech as a
. 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 and revenue growth. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.
Highlights from the ratings report include:
- SEMTECH 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, SEMTECH CORP turned its bottom line around by earning $0.41 versus -$2.44 in the prior year. This year, the market expects an improvement in earnings ($1.73 versus $0.41).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 92.7% when compared to the same quarter one year prior, rising from -$210.81 million to -$15.44 million.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, SEMTECH CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Net operating cash flow has significantly decreased to $11.63 million or 61.98% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full Semtech Ratings Report.
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