RECOMMENDATION
We rate ZORAN CORP (ZRAN) 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 revenue growth, largely
solid financial position with reasonable debt levels by most measures, compelling growth in net income,
attractive valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the
company has had lackluster performance in the stock itself.
HIGHLIGHTS
The revenue growth came in higher than the industry average of 12.6%. Since the same quarter one year
prior, revenues rose by 34.4%. Growth in the company's revenue appears to have helped boost the earnings
per share.
ZRAN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a
relatively favorable sign. Along with this, the company maintains a quick ratio of 4.14, which clearly
demonstrates the ability to cover short-term cash needs.
The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500
and the Semiconductors & Semiconductor Equipment industry. The net income increased by 634.6% when
compared to the same quarter one year prior, rising from -$10.99 million to $58.73 million.
44.90% is the gross profit margin for ZORAN CORP which we consider to be strong. Despite the high profit
margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross
profit margin, ZRAN's net profit margin of 45.40% significantly outperformed against the industry.
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