Why Pixelworks (PXLW) Stock Is Up Today

NEW YORK (TheStreet) -- Pixelworks (PXLW) was gaining 7.3% to $5.29 Friday after beating analysts' expectations for earnings in the first quarter.

For the first quarter Pixelworks reported a loss of -4 cents a share, beating the Capital IQ Consensus Estimate of -7 cents a share by 3 cents. Revenue grew 63.2% from the year-ago quarter to $13.5 million. Analysts expected revenue of $13.1 million for the quarter.

"Pixelworks is off to a solid start in 2014 with first quarter revenue up 64% year-over-year, driven by growth in our chip business and continued successful execution on our licensing partnerships," Pixelworks president and CEO Bruce Walicek said in a press release.

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TheStreet Ratings team rates PIXELWORKS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate PIXELWORKS INC (PXLW) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and weak operating cash flow."

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

  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, PIXELWORKS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$3.00 million or 207.17% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • PIXELWORKS INC reported significant earnings per share improvement 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, PIXELWORKS INC reported poor results of -$0.48 versus -$0.31 in the prior year. This year, the market expects an improvement in earnings ($0.08 versus -$0.48).
  • The gross profit margin for PIXELWORKS INC is rather high; currently it is at 64.44%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -0.33% is in-line with the industry average.
  • 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 98.6% when compared to the same quarter one year prior, rising from -$3.56 million to -$0.05 million.
  • You can view the full analysis from the report here: PXLW Ratings Report

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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.

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