Cree Inc Stock Upgraded (CREE)

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) -- Cree (Nasdaq: CREE) has been upgraded by TheStreet Ratings from hold to buy. 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, good cash flow from operations, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

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Highlights from the ratings report include:
  • CREE's revenue growth has slightly outpaced the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 16.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 4.53, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has increased to $91.14 million or 49.00% when compared to the same quarter last year. In addition, CREE INC has also vastly surpassed the industry average cash flow growth rate of -9.82%.
  • CREE INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CREE INC increased its bottom line by earning $1.01 versus $0.74 in the prior year. This year, the market expects an improvement in earnings ($1.96 versus $1.01).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Semiconductors & Semiconductor Equipment industry average, but is greater than that of the S&P 500. The net income increased by 5.7% when compared to the same quarter one year prior, going from $28.24 million to $29.85 million.

Cree, Inc. develops, manufactures, and sells lighting-class light emitting diode (LED), lighting, and semiconductor products for power and radio-frequency (RF) applications in the United States, China, Europe, South Korea, Japan, Malaysia, and Taiwan. Cree has a market cap of $6 billion and is part of the technology sector and electronics industry. Shares are down 28.3% year to date as of the close of trading on Thursday.

You can view the full Cree Ratings Report or get investment ideas from our investment research center.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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