NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.
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Highlights from the ratings report include:
- 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 Semiconductors & Semiconductor Equipment industry and the overall market, ADVANTEST CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$23.43 million or 241.95% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- ATE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 26.82%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- ADVANTEST CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, ADVANTEST CORP swung to a loss, reporting -$0.15 versus $0.21 in the prior year.
- The gross profit margin for ADVANTEST CORP is rather high; currently it is at 58.30%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ATE's net profit margin of 1.30% significantly trails the industry average.
Advantest Corporation, together with its subsidiaries, manufactures, and sells semiconductor and component test system products, and mechatronics-related products. It operates in three segments: Semiconductor and Component Test System; Mechatronics System; and Services, Support, and Others. Advantest has a market cap of $2.19 billion and is part of the
industry. Shares are up 33.8% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.