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Veeco Instruments (VECO) Is Today's Dead Cat Bounce Stock

Stock quotes in this article: VECO

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 or Stephanie Link.

Trade-Ideas LLC identified Veeco Instruments ( VECO) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Veeco Instruments as such a stock due to the following factors:

  • VECO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.7 million.
  • VECO has traded 95,697 shares today.
  • VECO is up 3.4% today.
  • VECO was down 7% yesterday.

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More details on VECO:

Veeco Instruments Inc., together with its subsidiaries, designs, manufactures, and markets various equipments to make light emitting diodes (LEDs) and hard-disk drives worldwide. Currently there are 3 analysts that rate Veeco Instruments a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for Veeco Instruments has been 551,000 shares per day over the past 30 days. Veeco Instruments has a market cap of $1.2 billion and is part of the technology sector and electronics industry. Shares are up 3.7% year to date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Veeco Instruments as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • VECO's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 5.09, which clearly demonstrates the ability to cover short-term cash needs.
  • 38.84% is the gross profit margin for VEECO INSTRUMENTS INC which we consider to be strong. Regardless of VECO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VECO's net profit margin of -4.18% significantly underperformed when compared to the industry average.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, VEECO INSTRUMENTS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $3.27 million or 82.48% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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