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"We rate SILICON IMAGE INC (SIMG) 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 growth in earnings per share, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SILICON IMAGE INC has improved earnings per share by 18.2% 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, SILICON IMAGE INC turned its bottom line around by earning $0.14 versus -$0.13 in the prior year. This year, the market expects an improvement in earnings ($0.27 versus $0.14).
- SIMG 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 3.66, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has increased to $5.11 million or 13.92% when compared to the same quarter last year. In addition, SILICON IMAGE INC has also modestly surpassed the industry average cash flow growth rate of 11.72%.
- The gross profit margin for SILICON IMAGE INC is rather high; currently it is at 62.95%. 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 14.64% trails the industry average.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Semiconductors & Semiconductor Equipment industry average. The net income increased by 14.9% when compared to the same quarter one year prior, going from $8.97 million to $10.30 million.
- You can view the full analysis from the report here: SIMG Ratings Report