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, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- UMC's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, UMC has a quick ratio of 1.55, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for UNITED MICROELECTRONICS CORP is currently very high, coming in at 80.40%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, UMC's net profit margin of 7.80% significantly trails the industry average.
- UNITED MICROELECTRONICS CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, UNITED MICROELECTRONICS CORP reported lower earnings of $0.13 versus $0.31 in the prior year. This year, the market expects an improvement in earnings ($0.14 versus $0.13).
- UMC, with its very weak revenue results, has greatly underperformed against the industry average of 25.9%. Since the same quarter one year prior, revenues plummeted by 62.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
United Microelectronics Corporation operates as a semiconductor wafer foundry. The company provides wafer fabrication services and technologies to its customers based on their designs. The company has a P/E ratio of 7.9, below the average electronics industry P/E ratio of 42 and below the S&P 500 P/E ratio of 17.7. United Microelectronics has a market cap of $6.54 billion and is part of the
industry. Shares are up 21% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet RatingsStaff