Why Fairchild Semiconductor (FCS) Stock Is Climbing Today

NEW YORK (TheStreet) -- Shares of Fairchild Semiconductor Intl. Inc. (FCS) are higher by 6.29% to $16.99 in mid-morning trading on Wednesday, following a Bloomberg report suggesting Infineon Technologies AG (IFNNY) is close to striking a deal to purchase a U.S.-based semiconductor company for almost $2 billion.

In a report published in July, Bloomberg said the largest chip maker in Germany could be eyeing Fairchild Semiconductor as a potential acquisition, the report also mentioned Power Integrations Inc. (POWI) , and Semtech Corp. (SMTC) as possibilities.

The potential billion dollar purchase could be announced as early as today, sources told Bloomberg.
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Power Integrations stock is higher by 9.46% to $62.62, and shares of Semtech are up 8.09% to $25.25 this morning.

Separately, TheStreet Ratings team rates FAIRCHILD SEMICONDUCTOR INTL as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate FAIRCHILD SEMICONDUCTOR INTL (FCS) a BUY. This is driven by several positive factors, 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 compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

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

  • 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 337.3% when compared to the same quarter one year prior, rising from -$7.50 million to $17.80 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.0%. Since the same quarter one year prior, revenues slightly increased by 4.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • FCS's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, FCS has a quick ratio of 2.22, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 68.92% to $84.80 million when compared to the same quarter last year. In addition, FAIRCHILD SEMICONDUCTOR INTL has also vastly surpassed the industry average cash flow growth rate of -9.88%.
  • 41.44% is the gross profit margin for FAIRCHILD SEMICONDUCTOR INTL 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, FCS's net profit margin of 4.79% significantly trails the industry average.
  • You can view the full analysis from the report here: FCS Ratings Report

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