Altera (ALTR) Stock Gaining on Speculation of Renewed Intel Buyout Talks

NEW YORK (TheStreet) -- Shares of Altera Corp. (ALTR) are higher by 6.37% to $47.25 in pre-market trading on Monday morning, following a report from the New York Post suggesting that the semiconductor company and Intel (INTC) have renewed discussions regarding a $13 billion buyout of Altera by Intel.

Intel is said to be looking to diversify as its mainstay business is trying to cope with a lack of demand for its personal computers.

"You should not be surprised if a deal comes together quickly," a source told the Post.

Previous talks between the two companies came to nothing and ended in April with Altera supposedly rejecting an offer of $54 per share.

Shares of Intel, a computer and digital technology platform designer and manufacturer, are up by 0.24% to $33.07 in pre-market trading today.

Separately, TheStreet Ratings team rates ALTERA CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ALTERA CORP (ALTR) 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 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 its strengths outweigh the fact that the company has had sub par growth in net income."

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

  • Compared to its closing price of one year ago, ALTR's share price has jumped by 36.63%, 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 14.84%.
  • 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 0.0%. 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.
  • You can view the full analysis from the report here: ALTR Ratings Report

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