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) -- RDA Microelectronics (Nasdaq: RDA) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
- EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
- Compared to its closing price of one year ago, RDA's share price has jumped by 65.98%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- RDA 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. To add to this, RDA has a quick ratio of 2.45, which demonstrates the ability of the company to cover short-term liquidity needs.
- RDA, with its very weak revenue results, has greatly underperformed against the industry average of 3.0%. Since the same quarter one year prior, revenues plummeted by 54.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, RDA MICROELECTRONCS INC -ADR's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for RDA MICROELECTRONCS INC -ADR is currently lower than what is desirable, coming in at 28.03%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -10.66% is significantly below that of the industry average.