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) -- IXYS Corporation (Nasdaq: IXYS) 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 good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
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- IXYS's debt-to-equity ratio is very low at 0.11 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 3.14, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has slightly increased to $9.41 million or 4.20% when compared to the same quarter last year. In addition, IXYS CORP has also vastly surpassed the industry average cash flow growth rate of -93.04%.
- IXYS, with its decline in revenue, slightly underperformed the industry average of 11.0%. Since the same quarter one year prior, revenues fell by 20.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The share price of IXYS CORP has not done very well: it is down 19.89% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- The gross profit margin for IXYS CORP is currently lower than what is desirable, coming in at 33.90%. Regardless of IXYS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, IXYS's net profit margin of 1.86% is significantly lower than the industry average.
-- Written by a member of TheStreet Ratings Staff