NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
Highlights from the ratings report include:
- QLOGIC CORP has improved earnings per share by 40.9% 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. This trend suggests that the performance of the business is improving. During the past fiscal year, QLOGIC CORP increased its bottom line by earning $1.28 versus $0.48 in the prior year. This year, the market expects an improvement in earnings ($1.48 versus $1.28).
- The revenue growth significantly trails the industry average of 77.5%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has increased to $40.31 million or 31.54% when compared to the same quarter last year. Despite an increase in cash flow of 31.54%, QLOGIC CORP is still growing at a significantly lower rate than the industry average of 130.79%.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Computers & Peripherals industry average, but is greater than that of the S&P 500. The net income increased by 27.4% when compared to the same quarter one year prior, rising from $25.45 million to $32.43 million.
- QLGC has underperformed the S&P 500 Index, declining 17.33% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
QLogic Corporation engages in the design and supply of storage networking, high performance computing networking, and converged networking infrastructure solutions. The company has a P/E ratio of 9.4, equal to the average electronics industry P/E ratio and below the S&P 500 P/E ratio of 17.7. QLogic has a market cap of $1.3 billion and is part of the
industry. Shares are down 27.7% year to date as of the close of trading on Monday.
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