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NEW YORK (TheStreet) -- Vimicro International (VIMC) has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate VIMICRO INTL CORP -ADR (VIMC) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The area that we feel has been the company's primary weakness has been its disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, VIMICRO INTL CORP -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
- 39.41% is the gross profit margin for VIMICRO INTL CORP -ADR which we consider to be strong. Regardless of VIMC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VIMC's net profit margin of 12.05% is significantly lower than the industry average.
- VIMICRO INTL CORP -ADR reported significant earnings per share improvement 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, VIMICRO INTL CORP -ADR swung to a loss, reporting -$0.30 versus $0.05 in the prior year. This year, the market expects an improvement in earnings ($0.23 versus -$0.30).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 82.8% when compared to the same quarter one year prior, rising from $1.82 million to $3.33 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 18.7%. Since the same quarter one year prior, revenues rose by 14.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- You can view the full analysis from the report here: VIMC Ratings Report