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) -- Micrel (Nasdaq: MCRL) 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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- MCRL 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. To add to this, MCRL has a quick ratio of 2.47, which demonstrates the ability of the company to cover short-term liquidity needs.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.5%. Since the same quarter one year prior, revenues slightly dropped by 2.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The gross profit margin for MICREL INC is rather high; currently it is at 58.10%. Regardless of MCRL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MCRL's net profit margin of 7.44% is significantly lower than the industry average.
- Net operating cash flow has significantly decreased to $6.37 million or 66.71% when compared to the same quarter last year. Despite a decrease in cash flow MICREL INC is still fairing well by exceeding its industry average cash flow growth rate of -93.38%.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, MICREL INC's return on equity is below that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff