Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified

Vimicro International

(

VIMC

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Vimicro International as such a stock due to the following factors:

  • VIMC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.0 million.
  • VIMC has traded 68,521 shares today.
  • VIMC is down 3.3% today.
  • VIMC was up 5.7% yesterday.

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More details on VIMC:

Vimicro International Corporation, together with its subsidiaries, provides video surveillance solution and video processors in Mainland China, Hong Kong, and the United States. It operates through Video surveillance Product and Video Processor segments. Currently there is 1 analyst that rates Vimicro International a buy, no analysts rate it a sell, and none rate it a hold.

TST Recommends

The average volume for Vimicro International has been 390,800 shares per day over the past 30 days. Vimicro International has a market cap of $317.9 million and is part of the technology sector and electronics industry. Shares are up 121.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Vimicro International as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:

  • VIMC's very impressive revenue growth greatly exceeded the industry average of 1.4%. Since the same quarter one year prior, revenues leaped by 51.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • VIMC's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.30, which illustrates the ability to avoid short-term cash problems.
  • 41.97% is the gross profit margin for VIMICRO INTL CORP -ADR 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, VIMC's net profit margin of 6.56% significantly trails the industry average.
  • Powered by its strong earnings growth of 187.50% and other important driving factors, this stock has surged by 283.23% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, VIMICRO INTL CORP -ADR's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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