NXP Semiconductor (NXPI) Showing Signs Of Being A Momo Momentum Stock

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.

Trade-Ideas LLC identified NXP Semiconductor ( NXPI) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified NXP Semiconductor as such a stock due to the following factors:

  • NXPI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $153.7 million.
  • NXPI has a PE ratio of 1248.3.
  • NXPI is currently in the upper 30% of its 1-year range.
  • NXPI is in the upper 25% of its 20-day range.
  • NXPI is in the upper 35% of its 5-day range.
  • NXPI is currently trading above yesterday's high.
  • NXPI has experienced a gap between today's open and yesterday's close of 0.3%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on NXPI:

NXP Semiconductors N.V. provides mixed signal and standard product solutions for radio frequency (RF), analog, power management, interface, security, and digital processing products worldwide. It provides integrated circuits (ICs) and discrete semiconductors. NXPI has a PE ratio of 1248.3. Currently there are 8 analysts that rate NXP Semiconductor a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for NXP Semiconductor has been 2.2 million shares per day over the past 30 days. NXP Semiconductor has a market cap of $9.4 billion and is part of the technology sector and electronics industry. The stock has a beta of 3.33 and a short float of 0.7% with 0.29 days to cover. Shares are up 42.3% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates NXP Semiconductor as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 8.2%. Since the same quarter one year prior, revenues slightly increased by 8.6%. Growth in the company's revenue appears to have helped boost 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 223.3% when compared to the same quarter one year prior, rising from -$90.00 million to $111.00 million.
  • NXP SEMICONDUCTORS NV 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, NXP SEMICONDUCTORS NV reported poor results of -$0.48 versus -$0.20 in the prior year. This year, the market expects an improvement in earnings ($3.03 versus -$0.48).
  • Net operating cash flow has decreased to $160.00 million or 40.52% when compared to the same quarter last year. Despite a decrease in cash flow NXP SEMICONDUCTORS NV is still fairing well by exceeding its industry average cash flow growth rate of -88.58%.
  • The debt-to-equity ratio is very high at 3.04 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, NXPI maintains a poor quick ratio of 0.94, which illustrates the inability to avoid short-term cash problems.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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