Altera (ALTR) Is Today's Perilous Reversal Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Altera ( ALTR) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Altera as such a stock due to the following factors:

  • ALTR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $363.8 million.
  • ALTR has traded 2.1 million shares today.
  • ALTR is down 3.2% today.
  • ALTR was up 9.8% yesterday.

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More details on ALTR:

Altera Corporation, a semiconductor company, designs and sells programmable logic devices (PLDs), HardCopy application-specific integrated circuit (ASIC) devices, power system-on-chip devices (PowerSoCs), pre-defined design building blocks, and associated development tools. The stock currently has a dividend yield of 1.7%. ALTR has a PE ratio of 28.6. Currently there are 5 analysts that rate Altera a buy, 1 analyst rates it a sell, and 15 rate it a hold.

The average volume for Altera has been 5.5 million shares per day over the past 30 days. Altera has a market cap of $12.5 billion and is part of the technology sector and electronics industry. The stock has a beta of 0.79 and a short float of 3% with 1.00 days to cover. Shares are up 23.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Altera as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, ALTR's share price has jumped by 28.16%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ALTR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 4.41, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has slightly increased to $136.63 million or 4.75% when compared to the same quarter last year. Despite an increase in cash flow, ALTERA CORP's cash flow growth rate is still lower than the industry average growth rate of 15.93%.
  • The gross profit margin for ALTERA CORP is rather high; currently it is at 67.05%. Regardless of ALTR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ALTR's net profit margin of 21.78% compares favorably to the industry average.
  • ALTR, with its decline in revenue, slightly underperformed the industry average of 0.5%. Since the same quarter one year prior, revenues slightly dropped by 5.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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