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) -- QLogic Corporation (Nasdaq: QLGC) has been downgraded by TheStreet Ratings from buy to hold. 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. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and unimpressive growth in net income.
- EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
- QLGC 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 7.46, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for QLOGIC CORP is currently very high, coming in at 73.60%. Regardless of QLGC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, QLGC's net profit margin of 11.09% is significantly lower than the industry average.
- QLOGIC CORP's earnings per share declined by 48.3% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, QLOGIC CORP reported lower earnings of $1.16 versus $1.28 in the prior year. For the next year, the market is expecting a contraction of 31.9% in earnings ($0.79 versus $1.16).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Computers & Peripherals industry. The net income has significantly decreased by 55.9% when compared to the same quarter one year ago, falling from $30.03 million to $13.24 million.
-- Written by a member of TheStreet Ratings Staff