NEW YORK (TheStreet) -- Shares of Emulex Corporation (ELX - Get Report) are down -23.43% to $5.48 on Thursday, after a ratings downgrade to "neutral" from "overweight" at Piper Jaffray following the company's 2014 third quarter results.
The company, which provides network convergence solutions that connect servers, storage and networks within the data center, reported net income was $7.2 million or 9 cents per diluted share for the 2014 third quarter, compared to $6.8 million, or 8 cents per diluted share from the same quarter the previous year.
Emulex reported a net revenue of $109.7 million versus $116.8 million from the 2013 third quarter.
Must Read: Warren Buffett's 10 Favorite Growth Stocks
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
Gross profit for the third quarter was $63.6 million, versus the 2013 third quarter gross profit of $68.4 million.
Piper Jaffray said the company is lacking visibility and potential catalysts.
- ELX's revenue growth has slightly outpaced the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 0.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Although ELX's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 3.74, which clearly demonstrates the ability to cover short-term cash needs.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- 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 172.1% when compared to the same quarter one year ago, falling from $5.58 million to -$4.03 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Communications Equipment industry and the overall market, EMULEX CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: ELX Ratings Report