Why Cypress Semiconductor (CY) Is Climbing After Hours

NEW YORK (TheStreet) -- Cypress Semiconductor Corp (CY) is gaining in extended trading after upping its previous first-quarter guidance.

After the bell, shares added 1.4% to $10.48.

The chipmaker said it expects revenue between $169 million and $171 million over the three months to March, higher than previous guidance of $161 million to $168 million.

Analysts surveyed by Thomson Reuters forecast sales of $165 million.

"Q1 was strong," said CEO T.K. Rodgers in a statement. "We have a solid design win pipeline that will feed our revenue growth through the second quarter of 2014."

The San Jose, Calif.-based business also announced its CFO Brad Buss was retiring, effective June 1. Buss has been in the position since 2005.

Thad Trent, currently vice president of finance, will assume the role of executive vice president and CFO once Buss steps down.

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TheStreet Ratings team rates CYPRESS SEMICONDUCTOR CORP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CYPRESS SEMICONDUCTOR CORP (CY) 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 increase in net income, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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 38.9% when compared to the same quarter one year prior, rising from -$22.22 million to -$13.58 million.
  • Net operating cash flow has increased to $21.04 million or 21.62% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -9.54%.
  • CYPRESS SEMICONDUCTOR CORP has improved earnings per share by 40.0% in the most recent quarter compared to 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, CYPRESS SEMICONDUCTOR CORP reported poor results of -$0.32 versus -$0.16 in the prior year. This year, the market expects an improvement in earnings ($0.51 versus -$0.32).
  • The debt-to-equity ratio of 1.36 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, CY has a quick ratio of 0.61, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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, CYPRESS SEMICONDUCTOR CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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