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Why Geospace Technologies (GEOS) Stock Is Down Today

Stocks in this article: GEOS

NEW YORK (TheStreet) -- Geospace Technologies (GEOS) was falling -13.4% to $48.47 Thursday after missing analysts' expectations for earnings in the fiscal second quarter.

For the second quarter Geospace Technologies reported earnings of 82 cents a share, missing the Capital IQ Consensus Estimate of $1.11 a share by 29 cents. Revenue fell -10.3% from the year-ago quarter to $68.55 million. Analysts expected revenue of $64.52 million for the quarter.

"Revenues and net income for the second quarter of our fiscal year saw respective reductions of 10% and 36% compared to the second quarter of last year," Geospace Technologies president and CEO Walter R. Wheeler said in a press release. "The lower quarterly revenues reflect reduced demand and deliveries for each of our product segments during the quarter. Lower product demand in our traditional and wireless product segments can be largely attributed to continued softness in the land seismic market, particularly in North America."

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TheStreet Ratings team rates GEOSPACE TECHNOLOGIES CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate GEOSPACE TECHNOLOGIES CORP (GEOS) a BUY. This is driven by a number of strengths, 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, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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

  • The revenue growth came in higher than the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 30.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • GEOS 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, GEOS has a quick ratio of 2.17, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Energy Equipment & Services industry and the overall market, GEOSPACE TECHNOLOGIES CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 2596.87% to $52.73 million when compared to the same quarter last year. In addition, GEOSPACE TECHNOLOGIES CORP has also vastly surpassed the industry average cash flow growth rate of 37.21%.
  • 49.89% is the gross profit margin for GEOSPACE TECHNOLOGIES CORP which we consider to be strong. Regardless of GEOS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GEOS's net profit margin of 23.85% significantly outperformed against the industry.
  • You can view the full analysis from the report here: GEOS Ratings Report

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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.

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