NEW YORK (TheStreet) -- Shares of Cray Inc. (CRAY - Get Report) are jumping 14.15% to $31.05 after it was awarded a $174 million supercomputer contract from the National Nuclear Security Administration.
The new supercomputer will be used to ensure the safety, security and effectiveness of the U.S.' nuclear stockpile.
Cray, which designs and manufactures high performance computing systems, said the deal is one of the largest contracts in its history.
TheStreet Ratings team rates CRAY INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CRAY INC (CRAY) 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 largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CRAY 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, CRAY has a quick ratio of 2.10, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has significantly increased by 185.05% to $61.01 million when compared to the same quarter last year. In addition, CRAY INC has also vastly surpassed the industry average cash flow growth rate of 5.28%.
- 39.64% is the gross profit margin for CRAY INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -23.47% is in-line with the industry average.
- 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 Computers & Peripherals industry. The net income has significantly decreased by 70.0% when compared to the same quarter one year ago, falling from -$7.61 million to -$12.94 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. In comparison to the other companies in the Computers & Peripherals industry and the overall market, CRAY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: CRAY Ratings Report