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) -- Microsemi (Nasdaq: MSCC) 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, compelling growth in net income, impressive record of earnings per share growth, 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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- The revenue growth came in higher than the industry average of 10.5%. Since the same quarter one year prior, revenues slightly increased by 2.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 131.8% when compared to the same quarter one year prior, rising from -$44.60 million to $14.20 million.
- MSCC's debt-to-equity ratio of 0.79 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.58 is very high and demonstrates very strong liquidity.
- MICROSEMI CORP reported significant earnings per share improvement 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, MICROSEMI CORP swung to a loss, reporting -$0.36 versus $0.63 in the prior year. This year, the market expects an improvement in earnings ($1.95 versus -$0.36).
- 48.80% is the gross profit margin for MICROSEMI CORP which we consider to be strong. Regardless of MSCC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MSCC's net profit margin of 5.73% is significantly lower than the industry average.
-- Written by a member of TheStreet Ratings Staff