Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Silicon Laboratories (Nasdaq: SLAB) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and relatively poor performance when compared with the S&P 500 during the past year.
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- The revenue growth came in higher than the industry average of 13.5%. Since the same quarter one year prior, revenues slightly increased by 4.3%. 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.
- SLAB's debt-to-equity ratio is very low at 0.14 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 4.20, which clearly demonstrates the ability to cover short-term cash needs.
- SILICON LABORATORIES INC's earnings per share declined by 38.3% 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, SILICON LABORATORIES INC increased its bottom line by earning $1.48 versus $0.80 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $1.48).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 38.5% when compared to the same quarter one year ago, falling from $20.51 million to $12.61 million.
- 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. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, SILICON LABORATORIES INC's return on equity is below that of both the industry average and the S&P 500.