NEW YORK ( TheStreet) -- STMicroelectronics (NYSE: STM) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Semiconductors & Semiconductor Equipment industry average, but is less than that of the S&P 500. The net income increased by 18.0% when compared to the same quarter one year prior, going from $356.00 million to $420.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for STMICROELECTRONICS NV is rather high; currently it is at 50.60%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 16.40% trails the industry average.
  • 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, STMICROELECTRONICS NV's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • STM has underperformed the S&P 500 Index, declining 8.95% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

STMicroelectronics N.V., an independent semiconductor company, engages in the design, development, manufacture, and marketing of a range of semiconductor integrated circuits and discrete devices. The company has a P/E ratio of 6.4, equal to the average electronics industry P/E ratio and below the S&P 500 P/E ratio of 17.7. STMicroelectronics has a market cap of $6.3 billion and is part of the technology sector and electronics industry. Shares are down 34.7% year to date as of the close of trading on Wednesday.

You can view the full STMicroelectronics Ratings Report or get investment ideas from our investment research center.
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