Why Silicon Motion Technology (SIMO) Stock Is Climbing Today

NEW YORK (TheStreet) --Shares of Silicon Motion Technology Corp. (SIMO) are higher by 3.07% to $22.15 in mid-morning trading on Monday after the company raised its 2014 second quarter guidance.

The fabless semiconductor company said it now expects a 30% to $32% growth in revenue for the second quarter, above its previous guidance for a 10% to 15% increase.

Silicon's non-GAAP gross margin is expected to be in the 51% to 52% range, higher than the company's original 48% to 50% estimate.

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Silicon said it will release its 2014 second quarter financial results after the market closes on July 28.

Separately, TheStreet Ratings team rates SILICON MOTION TECH -ADR as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate SILICON MOTION TECH -ADR (SIMO) 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 solid stock price performance, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • Compared to its closing price of one year ago, SIMO's share price has jumped by 106.07%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SIMO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • SIMO 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.
  • 48.49% is the gross profit margin for SILICON MOTION TECH -ADR which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, SIMO's net profit margin of 7.24% significantly trails the industry average.
  • SIMO, with its decline in revenue, underperformed when compared the industry average of 2.9%. Since the same quarter one year prior, revenues slightly dropped by 7.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: SIMO Ratings Report
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