Semiconductor Manufacturing (SMI) Reiterated as a

NEW YORK (TheStreet) -- TheStreet Ratings team reiterates Shanghai-based chipmaker Semiconductor Manufacturing International (SMI) as a "hold" with a ratings score of C-. 

On Monday, shares were rallying, climbing 8.5% to $4.98 by late morning. The company has added 27.7% in the year to date. 

TheStreet Ratings Team has this to say about their recommendation:

"We rate SEMICONDUCTOR MFG INTL CORP (SMI) 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 robust revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

Highlights from the analysis by the team goes as follows:

  • The revenue growth came in higher than the industry average of 5.0%. Since the same quarter one year prior, revenues rose by 15.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Powered by its strong earnings growth of 250.00% and other important driving factors, this stock has surged by 58.57% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 46.55% is the gross profit margin for SEMICONDUCTOR MFG INTL CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SMI's net profit margin of 7.95% is significantly lower than the industry average.
  • Despite currently having a low debt-to-equity ratio of 0.46, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, SEMICONDUCTOR MFG INTL CORP's return on equity is below that of both the industry average and the S&P 500.

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