Why Pixelworks (PXLW) Stock Is Up Today

NEW YORK (TheStreet) -- Pixelworks (PXLW) was gaining 16.5% to $8.85 Wednesday on speculation that it is working with Apple (AAPL) on an upcoming TV.

Apple accounted for 14% of Pixelworks' first-quarter revenue according to a Seeking Alpha speculating on the collaboration. The writer also highlighted that Pixelworks obtained mass-production qualification for a system-on-chip meant for larger screen devices, which will be developed with an unnamed partner.

Pixelworks first disclosed its relationship to Apple in March. Apple has not announced a TV set, though rumors of the device have circulated for years.

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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 some concerns, 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 area that we feel has been the company's primary weakness has been its disappointing return on equity."

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

  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. 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.
  • 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 ($0.14 versus -$0.48).
  • The gross profit margin for PIXELWORKS INC is rather high; currently it is at 67.49%. 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 -18.51% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 146.15% to $1.17 million when compared to the same quarter last year. In addition, PIXELWORKS INC has also vastly surpassed the industry average cash flow growth rate of 2.94%.
  • 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 53.6% when compared to the same quarter one year prior, rising from -$5.41 million to -$2.51 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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