NEW YORK (TheStreet) -- Shares of Himax Technologies (HIMX - Get Report) were falling 14% to $6.90 in pre-market trading Wednesday after Google (GOOGL - Get Report) decided to not increase its stake in the company.
Google had an option to increase its stake in Himax's Himax Display unit to 14.8% from its current 6.3% stake, but decided against it. Google uses Himax's liquid crystal on silicon microdisplay technology in Google Glass.
Himax said, "Google continues to work closely with Himax as a strategic partner on future technologies and products and will remain a board observer."
Must Read: Warren Buffett's 25 Favorite Stocks
"Despite Google's decision not to exercise its investment option in our HDI subsidiary, our continued close partnership with Google is invaluable as we aim to become a leading supplier to wearable technology companies and help to make the future of wearable products a reality," Himax president and CEO Jordan Wu said in a statement.
TheStreet Ratings team rates HIMAX TECHNOLOGIES INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate HIMAX TECHNOLOGIES INC (HIMX) a BUY. This is driven by a number of 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 impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- HIMAX TECHNOLOGIES INC has improved earnings per share by 27.3% in the most recent quarter compared to the same quarter a year ago. 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, HIMAX TECHNOLOGIES INC increased its bottom line by earning $0.35 versus $0.30 in the prior year. This year, the market expects an improvement in earnings ($0.47 versus $0.35).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry average. The net income increased by 24.6% when compared to the same quarter one year prior, going from $19.35 million to $24.11 million.
- HIMX's debt-to-equity ratio is very low at 0.24 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 1.46, which illustrates the ability to avoid short-term cash problems.
- 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, HIMAX TECHNOLOGIES INC's return on equity exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 962.28% to $22.89 million when compared to the same quarter last year. In addition, HIMAX TECHNOLOGIES INC has also vastly surpassed the industry average cash flow growth rate of -84.19%.
- You can view the full analysis from the report here: HIMX Ratings Report