Story updated at 9:55 a.m. to reflect market activity.
Cree fell -10% to $52.26 in morning trading.
The firm also lowered its estimates for the company. Despite better than expected revenue guidance, analyst Andrew Huang wrote, Cree is realizing lower lighting margins.
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Separately, TheStreet Ratings team rates CREE INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CREE INC (CREE) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 1.5%. Since the same quarter one year prior, revenues rose by 19.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CREE 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. Along with this, the company maintains a quick ratio of 5.08, which clearly demonstrates the ability to cover short-term cash needs.
- CREE 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, CREE INC increased its bottom line by earning $0.74 versus $0.38 in the prior year. This year, the market expects an improvement in earnings ($1.67 versus $0.74).
- 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 74.9% when compared to the same quarter one year prior, rising from $20.40 million to $35.68 million.
- Net operating cash flow has slightly increased to $98.75 million or 6.63% when compared to the same quarter last year. In addition, CREE INC has also vastly surpassed the industry average cash flow growth rate of -71.56%.
- You can view the full analysis from the report here: CREE Ratings Report