PMC-Sierra Inc. Stock Upgraded (PMCS)

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) -- PMC-Sierra (Nasdaq: PMCS) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.

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Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 137.62% to $33.47 million when compared to the same quarter last year. In addition, PMC-SIERRA INC has also vastly surpassed the industry average cash flow growth rate of -74.86%.
  • PMCS's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.93 is somewhat weak and could be cause for future problems.
  • In its most recent trading session, PMCS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 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 252.6% when compared to the same quarter one year ago, falling from $10.94 million to -$16.69 million.

PMC-Sierra, Inc. designs, develops, markets, and supports semiconductor solutions for communications network infrastructure in North America, Europe, and Asia. Its semiconductor devices enable networking equipment primarily in three markets: storage, optical, and mobile networks. PMC-Sierra has a market cap of $1.33 billion and is part of the technology sector and electronics industry. Shares are up 1.6% year to date as of the close of trading on Friday.

You can view the full PMC-Sierra Ratings Report or get investment ideas from our investment research center.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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