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) -- Synaptics (Nasdaq: SYNA) 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 and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- Although SYNA's debt-to-equity ratio of 0.01 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 3.72, which clearly demonstrates the ability to cover short-term cash needs.
- 49.40% is the gross profit margin for SYNAPTICS 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, SYNA's net profit margin of 4.76% significantly trails the industry average.
- SYNAPTICS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, SYNAPTICS INC reported lower earnings of $1.59 versus $1.80 in the prior year. This year, the market expects an improvement in earnings ($1.72 versus $1.59).
- The revenue fell significantly faster than the industry average of 27.6%. Since the same quarter one year prior, revenues slightly dropped by 4.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has declined marginally to $29.61 million or 4.64% when compared to the same quarter last year. Despite a decrease in cash flow of 4.64%, SYNAPTICS INC is in line with the industry average cash flow growth rate of -11.75%.
-- Written by a member of TheStreet Ratings Staff