Why Vimicro (VIMC) Stock Is Soaring Today

NEW YORK (TheStreet) -- Shares of Vimicro International Corp. (VIMC) are up 11.27% to $10.17 after the company announced early Tuesday morning it had secured a $12.4 million contract in the city of Taiyuan in China's Shanxi Province to provide an SVAC-compliant video surveillance system and cameras to the city's traffic and police department.

The company expects to complete the project by early 2015. 

In addition, Vimicro announced that its joint venture, Shanxi Zhongtianxin Science and Technology Co., has secured a revolving line of credit of up to approximately $65 million in an agreement on project financing and strategic cooperation with CITIC Bank Taiyuan Branch.

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Separately, TheStreet Ratings team rates VIMICRO INTL CORP -ADR as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate VIMICRO INTL CORP -ADR (VIMC) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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 and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

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

  • VIMC's very impressive revenue growth greatly exceeded the industry average of 10.3%. Since the same quarter one year prior, revenues leaped by 116.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • VIMC's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.49, which illustrates the ability to avoid short-term cash problems.
  • 37.83% is the gross profit margin for VIMICRO INTL CORP -ADR which we consider to be strong. 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 11.26% trails the industry average.
  • VIMICRO INTL CORP -ADR 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, VIMICRO INTL CORP -ADR swung to a loss, reporting -$0.30 versus $0.05 in the prior year. This year, the market expects an improvement in earnings ($0.07 versus -$0.30).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, VIMICRO INTL CORP -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: VIMC Ratings Report
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