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) -- Intersil Corporation (Nasdaq: ISIL) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.
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- 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. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, INTERSIL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $16.20 million or 25.96% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- ISIL has underperformed the S&P 500 Index, declining 25.00% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- ISIL, with its decline in revenue, slightly underperformed the industry average of 14.7%. Since the same quarter one year prior, revenues fell by 15.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- INTERSIL 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, INTERSIL CORP swung to a loss, reporting -$0.29 versus $0.53 in the prior year. This year, the market expects an improvement in earnings ($0.01 versus -$0.29).
-- Written by a member of TheStreet Ratings Staff