NEW YORK ( TheStreet) -- Standard Microsystems Corporation (Nasdaq: SMSC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income 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:
- STANDARD MICROSYSTEMS CORP has improved earnings per share by 25.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, STANDARD MICROSYSTEMS CORP turned its bottom line around by earning $0.47 versus -$0.38 in the prior year. This year, the market expects an improvement in earnings ($1.18 versus $0.47).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry average. The net income increased by 28.4% when compared to the same quarter one year prior, rising from -$4.57 million to -$3.28 million.
- The gross profit margin for STANDARD MICROSYSTEMS CORP is rather high; currently it is at 56.50%. Regardless of SMSC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SMSC's net profit margin of -3.10% significantly underperformed when compared to the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, STANDARD MICROSYSTEMS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- SMSC has underperformed the S&P 500 Index, declining 7.21% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.