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) -- RDA Microelectronics (Nasdaq: RDA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.
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- The revenue growth greatly exceeded the industry average of 12.5%. Since the same quarter one year prior, revenues rose by 40.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- RDA 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, RDA has a quick ratio of 1.59, which demonstrates the ability of the company to cover short-term liquidity needs.
- RDA MICROELECTRONCS INC -ADR's earnings per share declined by 24.3% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, RDA MICROELECTRONCS INC -ADR reported lower earnings of $1.11 versus $1.12 in the prior year. This year, the market expects an improvement in earnings ($1.50 versus $1.11).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, RDA MICROELECTRONCS INC -ADR's return on equity significantly exceeds that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff