NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. 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 attractive valuation levels. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
Highlights from the ratings report include:
- Although STM's debt-to-equity ratio of 0.23 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.19, which illustrates the ability to avoid short-term cash problems.
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.7%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the Semiconductors & Semiconductor Equipment industry average, but is less than that of the S&P 500. The net income increased by 18.0% when compared to the same quarter one year prior, going from $356.00 million to $420.00 million.
- STMICROELECTRONICS NV has improved earnings per share by 17.9% 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. During the past fiscal year, STMICROELECTRONICS NV turned its bottom line around by earning $0.91 versus -$1.29 in the prior year. This year, the market expects an improvement in earnings ($1.02 versus $0.91).
STMicroelectronics N.V., an independent semiconductor company, engages in the design, development, manufacture, and marketing of a range of semiconductor integrated circuits and discrete devices. The company has a P/E ratio of 8.7, below the average electronics industry P/E ratio of 14 and below the S&P 500 P/E ratio of 17.7. STMicroelectronics has a market cap of $8 billion and is part of the
industry. Shares are down 21.4% year to date as of the close of trading on Wednesday.
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