Silicon Laboratories Inc. Stock Upgraded (SLAB)

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) -- Silicon Laboratories (Nasdaq: SLAB) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, 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.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 4.2%. Since the same quarter one year prior, revenues rose by 25.5%. 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.
  • SLAB's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.01, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has slightly increased to $43.06 million or 9.45% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -27.72%.
  • The gross profit margin for SILICON LABORATORIES INC is rather high; currently it is at 63.20%. Regardless of SLAB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SLAB's net profit margin of 6.70% is significantly lower than the same period one year prior.
  • SILICON LABORATORIES INC's earnings per share declined by 7.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, SILICON LABORATORIES INC reported lower earnings of $0.80 versus $1.56 in the prior year. This year, the market expects an improvement in earnings ($2.13 versus $0.80).
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Silicon Laboratories Inc., a fabless semiconductor company, designs, develops, and markets analog-intensive and mixed-signal integrated circuits (ICs). The company has a P/E ratio of 30.7, above the S&P 500 P/E ratio of 17.7. Silicon has a market cap of $1.7 billion and is part of the technology sector and electronics industry. Shares are down 5.9% year to date as of the close of trading on Tuesday.

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

-- Written by a member of TheStreet Ratings Staff

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.

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