Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model
NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been poor profit margins.
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Highlights from the ratings report include:
- The gross profit margin for RDA MICROELECTRONCS INC -ADR is currently lower than what is desirable, coming in at 31.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 12.90% trails that of the industry average.
- In its most recent trading session, RDA has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry average. The net income increased by 3.7% when compared to the same quarter one year prior, going from $11.78 million to $12.21 million.
- RDA MICROELECTRONCS INC -ADR reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, RDA MICROELECTRONCS INC -ADR increased its bottom line by earning $1.12 versus $0.25 in the prior year. This year, the market expects an improvement in earnings ($1.35 versus $1.12).
- RDA 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. To add to this, RDA has a quick ratio of 2.26, which demonstrates the ability of the company to cover short-term liquidity needs.
RDA Microelectronics, Inc., a fabless semiconductor company, designs, develops and markets radio-frequency and mixed-signal wireless SoC semiconductors. The company has a P/E ratio of 6.7, below the average electronics industry P/E ratio of 7.9 and below the S&P 500 P/E ratio of 17.7. RDA Microelectronics has a market cap of $426.8 million and is part of the
industry. Shares are down 17.9% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet Ratings Staff