Diodes Inc. Stock Downgraded (DIOD)

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) -- Diodes (Nasdaq: DIOD) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

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Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 13.8%. Since the same quarter one year prior, revenues rose by 34.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 29.8% when compared to the same quarter one year prior, rising from $6.65 million to $8.64 million.
  • Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that DIOD's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.30 is high and demonstrates strong liquidity.
  • DIODES INC has improved earnings per share by 28.6% 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, DIODES INC reported lower earnings of $0.51 versus $1.08 in the prior year. This year, the market expects an improvement in earnings ($1.19 versus $0.51).
  • 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, DIODES INC's return on equity significantly trails that of both the industry average and the S&P 500.

Diodes Incorporated, together with its subsidiaries, designs, manufactures, and supplies application specific standard products in the discrete, logic, and analog semiconductor markets primarily in Asia, North America, and Europe. Diodes has a market cap of $1.15 billion and is part of the technology sector and electronics industry. Shares are up 42.6% year to date as of the close of trading on Thursday.

You can view the full Diodes Ratings Report or get investment ideas from our investment research center.

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