STMicroelectronics (STM) Stock Gains on Heavy Trading Volume

NEW YORK (TheStreet) -- Shares of STMicroelectronics (STM) were gaining 1.2% to $8.30 on heavy trading volume Tuesday after the announcement of Canal+ Group's new Cube S set-top box.

The new Cube S set-top box is powered by STMicroelectronics' STiH310 dual-core multimedia processor, which offers "computing power of over 7500 DMIPS, powerful graphics acceleration," and connectivity optimized for Wyplay's open source Frog Client middleware which powers the user experience.

"Our STiH310 processor brings 10 times more processing power compared to the previous generation of Canal+ Group set-top-boxes, making the Cube S one of the most powerful and innovative hybrid devices," STMicroelectronics Group Vice President and General Manager of Consumer Product Division Philippe Notton said in a statement.

About 1.9 million shares of STMicroelectronics were traded by 9:37 a.m. Tuesday, above the company's average trading volume of about 1.2 million shares a day.

TheStreet Ratings team rates STMICROELECTRONICS NV as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate STMICROELECTRONICS NV (STM) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year."

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

  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Semiconductors & Semiconductor Equipment industry average. The net income increased by 8.3% when compared to the same quarter one year prior, going from -$24.00 million to -$22.00 million.
  • The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, STM has a quick ratio of 1.79, which demonstrates the ability of the company to cover short-term liquidity needs.
  • STMICROELECTRONICS NV reported flat earnings per share in the most recent 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, STMICROELECTRONICS NV turned its bottom line around by earning $0.14 versus -$0.56 in the prior year. This year, the market expects an improvement in earnings ($0.27 versus $0.14).
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, STMICROELECTRONICS NV's return on equity significantly trails that of both the industry average and the S&P 500.
  • STM has underperformed the S&P 500 Index, declining 8.27% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • You can view the full analysis from the report here: STM Ratings Report

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