NEW YORK (TheStreet) -- Shares of Altera (ALTR) are gaining by 3.68% to $48.71 in mid-morning trading Friday, on reports that Intel (INTC), the world's largest chip maker, is near a deal to buy Altera for $15 billion, the New York Post reports.
The price could be as high as $54 a share as Intel has been looking for growth due to the struggling personal-computer market, the publication noted. One of the reasons as to why PC-chip sales are declining is that nowadays, consumers are relying more and more on tablets and smartphones.
But acquiring Altera could help Intel expand its most profitable business, which is supplying server chips used in data centers, the New York Post highlighted.
Altera is a semiconductor company that designs and sells programmable logic devices, mega functions, and development software.
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 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 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 42.54%, 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 average is still marginally south of the industry average growth rate of 14.73%.
- 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.
- You can view the full analysis from the report here: ALTR Ratings Report