NEW YORK (
) has been upgraded by TheStreet Ratings from sell to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, compelling growth in net income, impressive record of earnings per share growth and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the ratings report include:
- LAVA's revenue growth has slightly outpaced the industry average of 4.3%. Since the same quarter one year prior, revenues rose by 12.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Powered by its strong earnings growth of 200.00% and other important driving factors, this stock has surged by 61.31% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LAVA should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 210.1% when compared to the same quarter one year prior, rising from -$2.71 million to $2.99 million.
- MAGMA DESIGN AUTOMATION INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, MAGMA DESIGN AUTOMATION INC's EPS of -$0.07 remained unchanged from the prior years' EPS of -$0.07. This year, the market expects an improvement in earnings ($0.39 versus -$0.07).
- LAVA's debt-to-equity ratio of 0.79 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that LAVA's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.85 is high and demonstrates strong liquidity.
Magma Design Automation, Inc., together with its subsidiaries, provides electronic design automation software products and related services. The company has a P/E ratio of 572, above the S&P 500 P/E ratio of 17.7. Magma Design Automation has a market cap of $391.5 million and is part of the
industry. Shares are up 42.3% year to date as of the close of trading on Friday.
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