NEW YORK (TheStreet) -- InterDigital (IDCC - Get Report) stock is soaring Tuesday after the wireless telecom updated its expectations for second-quarter revenue far above analysts' estimates. The company said it expects sales between $172 million and $210 million, triple prior guidance of $65 million to $72 million. Analysts surveyed by Thomson Reuters anticipated revenue of $48.6 million.
"With roughly half of the market under license, we believe there is ample opportunity to continue to add to our recurring revenue base while adding little variable cost," said CFO Richard J. Brezski in a statement.
Additionally, the company has signed a multi-year, royalty-bearing licensing agreement with Samsung covering the sale of 3G, 4G and future-generation wireless products.
By late morning, shares had surged 19% to $44.53.
TheStreet Ratings team rates INTERDIGITAL INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate INTERDIGITAL INC (IDCC) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing 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 2.5%. Since the same quarter one year prior, revenues rose by 22.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 84.8% when compared to the same quarter one year prior, rising from -$12.27 million to -$1.86 million.
- Despite currently having a low debt-to-equity ratio of 0.40, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 7.12 is very high and demonstrates very strong liquidity.
- 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. When compared to other companies in the Communications Equipment industry and the overall market, INTERDIGITAL INC's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$2.86 million or 103.75% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: IDCC Ratings Report