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 largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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 3.30, which clearly demonstrates the ability to cover short-term cash needs.
- 45.90% 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 9.80% significantly trails the industry average.
- SYNAPTICS INC's earnings per share declined by 25.0% 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 ($2.53 versus $1.80).
- The revenue fell significantly faster than the industry average of 38.0%. Since the same quarter one year prior, revenues fell by 12.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
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 18.9, below the average computer hardware industry P/E ratio of 19.3 and above the S&P 500 P/E ratio of 17.7. Synaptics has a market cap of $1 billion and is part of the
industry. Shares are up 10.7% year to date as of the close of trading on Tuesday.
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