Why Atmel (ATML) Is a

NEW YORK (TheStreet) -- TheStreet Ratings team reiterates its "hold" rating for Atmel (ATML) with a ratings score of C.

Shares of the semiconductor producer rose 5.3% to $8.35 Wednesday. Atmel rose 7.2% in the past month, and 18.6% over the past year with a 52-week high of $8.20 on June 4, 2013. More than 12.6 million shares of Atmel changed hands on Wednesday, well above the average volume of about 5.5 million shares per day.

ATML Chart ATML data by YCharts

TheStreet Ratings team rates ATMEL CORP as a Hold with a ratings score of C. The team has this to say about its 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 good cash flow from operations, increase in stock price during the past year 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:

  • 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 -12.49%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.4%. 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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