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Nam Tai Electronics (NTE) Falls After Revenue Declines 25%

Stocks in this article: NTE

NEW YORK (TheStreet) -- Nam Tai Electronics (NTE) fell 11.9% to $5.85 Monday after fourth-quarter revenue declined 25% from a year earlier.

In the fourth quarter, Nam Tai posted revenue of $234.9 million, compared to $312.2 million in the same quarter in 2012. Revenue for the year rose 26% to $855.8 million from $678.1 million in 2012.

"This revenue was mainly attributed to the production of high-resolution LCMs for smartphones at the Company's Shenzhen facility," Nam Tai said in a press release.

The company derives most of revenue from the production of high-resolution LCMs for smartphones. Nam Tai will stop producing LCMs by the end of April. The company said the halt of production is "due to a customer's repeated and continuous changes in its formal purchasing orders without suitable commitment."

Nam Tai posted earnings of 20 cents a share in the fourth quarter, compared to 82 cents a share in the year-earlier quarter.

Nam Tai also announced it will pay a dividend of 2 cents a share for the second quarter on April 30. All shareholders of record as of March 31 will receive the dividend.

TheStreet Ratings team rates NAM TAI ELECTRONIC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about its recommendation:

"We rate NAM TAI ELECTRONIC (NTE) a BUY. This is driven by several positive factors, 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • NTE's very impressive revenue growth greatly exceeded the industry average of 1.7%. Since the same quarter one year prior, revenues leaped by 61.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NTE 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. To add to this, NTE has a quick ratio of 2.25, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, NAM TAI ELECTRONIC's return on equity exceeds that of both the industry average and the S&P 500.
  • NAM TAI ELECTRONIC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, NAM TAI ELECTRONIC turned its bottom line around by earning $1.20 versus -$0.01 in the prior year.

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