Will Cree (CREE) Stock Be Helped By Its New Generation LED Announcement?

NEW YORK (TheStreet) -- Cree Inc. (CREE) today announced a new generation of high-powered LEDs, which will achieve better performance and lower systems costs.

The semiconductor materials manufacturer said its new LEDS are a more effective way to achieve low-cost systems than its mid-power LEDs.

"Using Cree's high-reliability ceramic package technology, the XLamp MH-B LED is able to operate at higher temperatures than MP LEDs with no reduction in rated lifetime, enabling an impressive 60 percent reduction in heat-sink size and cost. Using up to 26 times fewer LEDs than MP LEDs to achieve the same level of performance, the XLamp MH-B is optimized to simplify LED system designs for applications where multiple MP LEDs are currently used," the company said.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Additionally, Cree also announced that it has filed a lawsuit in the U.S. District Court for the Western District of Wisconsin in order to prevent the companies Harvatek Corp. and Kingbright Corp. from infringing on its patented intellectual property.

Shares of Cree are up 0.12% to $41.15 in mid-morning trading on Tuesday.

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

"We rate CREE INC (CREE) a BUY. This is driven by a few notable 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 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 expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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

  • CREE's revenue growth has slightly outpaced the industry average of 10.2%. 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. The firm also exceeded the industry average cash flow growth rate of 7.68%.
  • 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 ($1.86 versus $1.01).
  • 45.39% is the gross profit margin for CREE INC which we consider to be strong. Regardless of CREE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CREE's net profit margin of 6.84% is significantly lower than the industry average.
  • You can view the full analysis from the report here: CREE Ratings Report

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