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) -- CEVA (Nasdaq: CEVA) 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 sub par growth in net income.
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- CEVA 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 12.26, which clearly demonstrates the ability to cover short-term cash needs.
- CEVA INC's earnings per share declined by 45.0% 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, CEVA INC increased its bottom line by earning $0.76 versus $0.50 in the prior year. This year, the market expects an improvement in earnings ($0.78 versus $0.76).
- The gross profit margin for CEVA INC is currently very high, coming in at 92.40%. Regardless of CEVA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 21.60% trails the industry average.
- CEVA, with its decline in revenue, underperformed when compared the industry average of 3.7%. Since the same quarter one year prior, revenues fell by 19.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.28%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 45.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.
-- Written by a member of TheStreet Ratings Staff