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Why Synergetics (SURG) Stock Is Lower Today

NEW YORK (TheStreet) -- Shares of Synergetics USA  (SURG) are down -9.59% to $3.11 on Tuesday after it reported lower results for its third quarter ended April 30.

The medical device maker posted net income of 4 cents per diluted share, compared to 5 cents per diluted share in the same period a year ago.

Revenue fell to $16.1 million from $16.3 million a year ago.

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Synergetics said sales in the U.S. decreased 1.9%, particularly for ophthalmic products.

TheStreet Ratings team rates SYNERGETICS USA INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate SYNERGETICS USA INC (SURG) 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, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."

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

  • SURG's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 7.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SURG 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. Along with this, the company maintains a quick ratio of 3.58, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • 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. When compared to other companies in the Health Care Equipment & Supplies industry and the overall market, SYNERGETICS USA 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 -$1.83 million or 222.53% 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: SURG Ratings Report
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