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) -- Exar Corporation (NYSE: EXAR) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow.
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- EXAR's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.95, which clearly demonstrates the ability to cover short-term cash needs.
- EXAR CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, EXAR CORP turned its bottom line around by earning $0.07 versus -$0.64 in the prior year. This year, the market expects an improvement in earnings ($0.36 versus $0.07).
- EXAR, with its decline in revenue, slightly underperformed the industry average of 4.8%. Since the same quarter one year prior, revenues slightly dropped by 1.0%. 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 207.3% when compared to the same quarter one year ago, falling from $1.52 million to -$1.63 million.
- Net operating cash flow has significantly decreased to -$5.41 million or 249.79% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.