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Perilous Reversal Stock: Camtek (CAMT)

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

  • CAMT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.1 million.
  • CAMT has traded 1.4 million shares today.
  • CAMT is down 3.1% today.
  • CAMT was up 9.9% yesterday.

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More details on CAMT:

Camtek Ltd., together with its subsidiaries, designs, develops, manufactures, and markets automatic optical inspection (AOI) systems and related products. CAMT has a PE ratio of 24.7.

The average volume for Camtek has been 1.6 million shares per day over the past 30 days. Camtek has a market cap of $114.8 million and is part of the technology sector and electronics industry. The stock has a beta of 2.81 and a short float of 1.3% with 0.04 days to cover. Shares are up 157.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:

  • Compared to its closing price of one year ago, CAMT's share price has jumped by 147.55%, exceeding the performance of the broader market during that same time frame. Although CAMT had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • CAMT's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CAMT has a quick ratio of 2.12, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.0%. Since the same quarter one year prior, revenues slightly dropped by 8.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 105.1% when compared to the same quarter one year ago, falling from $2.37 million to -$0.12 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, CAMTEK LTD's return on equity significantly trails that of both the industry average and the S&P 500.

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