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) -- Microsemi (Nasdaq: MSCC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- Despite its growing revenue, the company underperformed as compared with the industry average of 5.1%. Since the same quarter one year prior, revenues slightly increased by 3.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 122.46% to $62.53 million when compared to the same quarter last year. In addition, MICROSEMI CORP has also vastly surpassed the industry average cash flow growth rate of -9.96%.
- MSCC's debt-to-equity ratio of 0.79 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that MSCC's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.19 is high and demonstrates strong liquidity.
- MICROSEMI 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, MICROSEMI CORP turned its bottom line around by earning $0.48 versus -$0.36 in the prior year. This year, the market expects an improvement in earnings ($2.14 versus $0.48).
- The gross profit margin for MICROSEMI CORP is rather high; currently it is at 57.06%. Regardless of MSCC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MSCC's net profit margin of 0.53% is significantly lower than the industry average.