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) -- RDA Microelectronics (Nasdaq: RDA) has been upgraded by TheStreet Ratings from sell to 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 notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself.
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- The revenue growth greatly exceeded the industry average of 3.9%. Since the same quarter one year prior, revenues rose by 30.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- RDA 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.28, which illustrates the ability to avoid short-term cash problems.
- RDA MICROELECTRONCS INC -ADR's earnings per share declined by 17.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, RDA MICROELECTRONCS INC -ADR increased its bottom line by earning $1.12 versus $0.25 in the prior year. This year, the market expects an improvement in earnings ($1.32 versus $1.12).
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry average. The net income has decreased by 14.2% when compared to the same quarter one year ago, dropping from $15.71 million to $13.48 million.
- The gross profit margin for RDA MICROELECTRONCS INC -ADR is currently lower than what is desirable, coming in at 31.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 12.30% significantly trails the industry average.
-- Written by a member of TheStreet Ratings Staff