NEW YORK (TheStreet) -- Radisys (RSYS - Get Report), which makes electronics components for other companies' products, fell on Thursday after the company sold 5.7 million shares to pay for operations and reduce debt.
The company sold the shares at $3.40 a share to raise $17.9 million. That price was less than Wednesday's closing price of $3.89.
The stock was down 6.68% to $3.63 at 12:21 p.m. and had amassed a volume more than five times its average of 195,000.
TheStreet Ratings team rates RADISYS CORP as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate RADISYS CORP (RSYS) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 435.8% when compared to the same quarter one year ago, falling from -$4.86 million to -$26.02 million.
- 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 Electronic Equipment, Instruments & Components industry and the overall market, RADISYS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for RADISYS CORP is currently lower than what is desirable, coming in at 29.77%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -51.88% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$6.00 million or 301.07% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The share price of RADISYS CORP has not done very well: it is down 14.51% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full analysis from the report here: RSYS Ratings Report