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 largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
Highlights from the ratings report include:
- SYNA's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.42, which clearly demonstrates the ability to cover short-term cash needs.
- 49.10% is the gross profit margin for SYNAPTICS INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, SYNA's net profit margin of 8.70% significantly trails the industry average.
- SYNAPTICS INC's earnings per share declined by 13.2% in the most recent quarter compared to the same quarter a year ago. 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, SYNAPTICS INC increased its bottom line by earning $1.80 versus $1.49 in the prior year. This year, the market expects an improvement in earnings ($2.26 versus $1.80).
- Net operating cash flow has declined marginally to $19.50 million or 7.28% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Computers & Peripherals industry and the overall market, SYNAPTICS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
Synaptics Incorporated develops and supplies custom-designed human interface solutions that enable people to interact with various mobile computing, communications, entertainment, and other electronic devices. The company has a P/E ratio of 16, equal to the average computer hardware industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Synaptics has a market cap of $877 million and is part of the
industry. Shares are down 13.3% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet Ratings Staff