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) -- Micrel (Nasdaq: MCRL) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- MICREL 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 year. We feel that this trend should continue. During the past fiscal year, MICREL INC increased its bottom line by earning $0.31 versus $0.20 in the prior year. This year, the market expects an improvement in earnings ($0.40 versus $0.31).
- 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 174.8% when compared to the same quarter one year prior, rising from -$4.50 million to $3.36 million.
- MCRL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, MCRL has a quick ratio of 2.23, which demonstrates the ability of the company to cover short-term liquidity needs.
- MCRL, with its decline in revenue, slightly underperformed the industry average of 4.4%. Since the same quarter one year prior, revenues slightly dropped by 3.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for MICREL INC is rather high; currently it is at 50.68%. Regardless of MCRL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MCRL's net profit margin of 5.60% is significantly lower than the industry average.