NEW YORK ( TheStreet Ratings) -- Every trading day TheStreet Ratings' stock model reviews the investment ratings on around 4,700 U.S. traded stocks for potential upgrades or downgrades based on the latest available financial results and trading activity.
TheStreet Ratings released rating changes on 108 U.S. common stocks for week ending February 24, 2012. 86 stocks were upgraded and 22 stocks were downgraded by our stock model.
Rating Change #10
InterDigital Inc (IDCC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.Highlights from the ratings report include:
- Net operating cash flow has significantly increased by 93.91% to -$1.78 million when compared to the same quarter last year. Despite an increase in cash flow, INTERDIGITAL INC's cash flow growth rate is still lower than the industry average growth rate of 108.45%.
- The gross profit margin for INTERDIGITAL INC is currently very high, coming in at 100.00%. IDCC has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, IDCC's net profit margin of 29.60% compares favorably to the industry average.
- The revenue fell significantly faster than the industry average of 17.3%. Since the same quarter one year prior, revenues fell by 19.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- INTERDIGITAL INC's earnings per share declined by 35.5% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, INTERDIGITAL INC reported lower earnings of $1.94 versus $3.43 in the prior year. For the next year, the market is expecting a contraction of 22.2% in earnings ($1.51 versus $1.94).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Communications Equipment industry. The net income has significantly decreased by 33.6% when compared to the same quarter one year ago, falling from $34.31 million to $22.77 million.