NEW YORK ( TheStreet) -- Super Micro Computer (Nasdaq: SMCI) 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, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- SMCI's revenue growth has slightly outpaced the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 15.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- Net operating cash flow has significantly increased by 144.59% to $7.97 million when compared to the same quarter last year. In addition, SUPER MICRO COMPUTER INC has also vastly surpassed the industry average cash flow growth rate of -11.21%.
- Although SMCI's debt-to-equity ratio of 0.10 is very low, it is currently higher than that of the industry average. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.94 is somewhat weak and could be cause for future problems.
- SUPER MICRO COMPUTER INC reported flat earnings per share in the most recent quarter. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, SUPER MICRO COMPUTER INC reported lower earnings of $0.67 versus $0.93 in the prior year. This year, the market expects earnings to be in line with last year ($0.67 versus $0.67).
- The change in net income from the same quarter one year ago has exceeded that of the Computers & Peripherals industry average, but is less than that of the S&P 500. The net income has decreased by 0.5% when compared to the same quarter one year ago, dropping from $7.08 million to $7.04 million.