NEW YORK ( TheStreet) -- Cohu (Nasdaq: COHU) 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, attractive valuation levels, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • COHU has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.57, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly increased by 135.49% to $3.86 million when compared to the same quarter last year. In addition, COHU INC has also vastly surpassed the industry average cash flow growth rate of 47.54%.
  • 35.80% is the gross profit margin for COHU INC which we consider to be strong. Regardless of COHU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, COHU's net profit margin of 4.70% is significantly lower than the same period one year prior.
  • The revenue fell significantly faster than the industry average of 18.4%. Since the same quarter one year prior, revenues fell by 16.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

Cohu, Inc. engages in the development, manufacture, sale, and servicing of test handling and burn-in related equipment, and thermal sub-systems for the semiconductor industry worldwide. The company has a P/E ratio of 11.9, equal to the average electronics industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Cohu has a market cap of $287.5 million and is part of the technology sector and electronics industry. Shares are down 28.2% year to date as of the close of trading on Wednesday.

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