Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- GSI Technology (Nasdaq: GSIT) 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, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
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- GSIT 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 7.90, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has significantly increased by 1598.15% to $4.88 million when compared to the same quarter last year. In addition, GSI TECHNOLOGY INC has also vastly surpassed the industry average cash flow growth rate of -28.01%.
- 49.00% is the gross profit margin for GSI TECHNOLOGY INC 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, GSIT's net profit margin of 7.10% significantly trails the industry average.
- GSIT, with its decline in revenue, underperformed when compared the industry average of 4.1%. Since the same quarter one year prior, revenues fell by 23.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
-- Written by a member of TheStreet Ratings Staff