Himax Technologies (HIMX) In A Perilous Reversal

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

  • HIMX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.3 million.
  • HIMX has traded 361,340 shares today.
  • HIMX is down 7.3% today.
  • HIMX was up 7.2% yesterday.

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More details on HIMX:

Himax Technologies, Inc., a fabless semiconductor company, provides display imaging processing technologies to consumer electronics worldwide. The company operates through Driver IC and Non-Driver Products segments. The stock currently has a dividend yield of 7.1%. HIMX has a PE ratio of 21. Currently there are 4 analysts that rate Himax Technologies a buy, 2 analysts rate it a sell, and 3 rate it a hold.

The average volume for Himax Technologies has been 2.6 million shares per day over the past 30 days. Himax has a market cap of $1.3 billion and is part of the technology sector and electronics industry. Shares are down 5.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Himax Technologies as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • HIMX's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, HIMX has a quick ratio of 1.53, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • HIMX, with its decline in revenue, slightly underperformed the industry average of 0.7%. Since the same quarter one year prior, revenues slightly dropped by 8.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • HIMAX TECHNOLOGIES INC's earnings per share declined by 22.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HIMAX TECHNOLOGIES INC increased its bottom line by earning $0.39 versus $0.35 in the prior year. For the next year, the market is expecting a contraction of 24.9% in earnings ($0.29 versus $0.39).

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