These 4 Tech Companies Got a Hewlett-Packard (HPQ) Boost

NEW YORK (TheStreet) -- Stronger-than-expected earnings at Hewlett-Packard (HPQ) sparked a rally across the tech sector on Wednesday as IBM (IBM) and Intel (INTC) traded higher along with supplier Atmel (ATML) and Micron Technology (MU). By early afternoon, HP had surged 7.8% to $27.05, IBM was up 1.1% to $179.32, Atmel gained 2.2% to $7.70 and Micron Technology climbed 2.1% to $20.73.

Intel lagged the bunch, edging 0.6% higher to $23.78. Appetite for the stock was tempered after RBC Capital cut its rating to "sector perform" from "outperform" and revised its price target to $26 from $27. The investment firm said the company's return on investment doesn't justify its more-than-$2-billion annual spend on increasing tablet and handset market share.

HP impressed analysts with its fourth-quarter earnings of $1.01 a share, beating Thomson Reuters estimates by a penny. Revenue of $29.1 billion, though 3% lower than the year-ago quarter, was $1.19 billion above consensus.

TheStreet Ratings team rates Hewlett-Packard Co as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate Hewlett-Packard Co (HPQ) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, 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, weak operating cash flow and poor profit margins."

TheStreet Ratings team rates Micron Technology Inc as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate Micron Technology Inc (MU) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 9.3%. Since the same quarter one year prior, revenues rose by 44.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 729.16% and other important driving factors, this stock has surged by 249.64% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MU should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Micron Technology Inc reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Micron Technology Inc turned its bottom line around by earning $1 a share vs. -$1.04 a share in the prior year. This year, the market expects an improvement in earnings ($2.13 vs. $1).
  • 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 802.9% when compared to the same quarter one year prior, rising from -$243 million to $1,708 million.

TheStreet Ratings team rates IBM as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate IBM (IBM) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, notable return on equity, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • IBM has improved earnings per share by 10.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, IBM increased its bottom line by earning $14.41 a share vs. $13.12 a share in the prior year. This year, the market expects an improvement in earnings ($16.90 vs. $14.41).
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the IT Services industry and the overall market, IBM's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for IBM is rather high; currently it is at 53.54%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 17.03% trails the industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income increased by 5.7% when compared to the same quarter one year prior, going from $3,823 million to $4,041 million.
  • Despite the weak revenue results, IBM has outperformed against the industry average of 22.6%. Since the same quarter one year prior, revenues slightly dropped by 4.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

TheStreet Ratings team rates Intel Corp as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate Intel Corp (INTC) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, attractive valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • INTC's revenue growth has slightly outpaced the industry average of 9.3%. Since the same quarter one year prior, revenues slightly increased by 0.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Although INTC's debt-to-equity ratio of 0.24 is very low, it is currently higher than that of the industry average. To add to this, INTC has a quick ratio of 1.65, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $5,731.00 million or 11.34% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.73%.
  • The gross profit margin for Intel Corp is currently very high, coming in at 76.84%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 21.87% trails the industry average.

TheStreet Ratings team rates Atmel Corp as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate Atmel Corp (ATML) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, ATML's share price has jumped by 51.60%, exceeding the performance of the broader market during that same time frame. Although ATML had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • Net operating cash flow has significantly increased by 53.22% to $82.06 million when compared to the same quarter last year. In addition, Atmel Corp has also vastly surpassed the industry average cash flow growth rate of -11.73%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.3%. Since the same quarter one year prior, revenues slightly dropped by 1.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 74.9% when compared to the same quarter one year ago, falling from $21.64 million to $5.43 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, Atmel Corp's return on equity significantly trails that of both the industry average and the S&P 500.

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