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"We rate POWER INTEGRATIONS INC (POWI) a BUY. This is driven by some important positives, 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 largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- POWI 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 3.85, which clearly demonstrates the ability to cover short-term cash needs.
- POWER INTEGRATIONS INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, POWER INTEGRATIONS INC turned its bottom line around by earning $1.88 versus -$1.21 in the prior year. This year, the market expects an improvement in earnings ($2.34 versus $1.88).
- The gross profit margin for POWER INTEGRATIONS INC is rather high; currently it is at 59.65%. 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 17.87% trails the industry average.
- Net operating cash flow has slightly increased to $30.61 million or 5.54% when compared to the same quarter last year. Despite an increase in cash flow, POWER INTEGRATIONS INC's average is still marginally south of the industry average growth rate of 11.67%.
- POWI, with its decline in revenue, underperformed when compared the industry average of 18.7%. Since the same quarter one year prior, revenues slightly dropped by 1.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: POWI Ratings Report