Editor's Note: 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
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 feeble growth in its earnings per share, deteriorating net income, 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:
- ADVANTEST CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, ADVANTEST CORP reported poor results of -$0.24 versus -$0.15 in the prior year.
- 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 125.0% when compared to the same quarter one year ago, falling from $73.81 million to -$18.45 million.
- 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 $14.98 million or 81.27% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The share price of ADVANTEST CORP has not done very well: it is down 13.25% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
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 $2.67 billion and is part of the technology sector and electronics industry. Shares are down 10.5% year to date as of the close of trading on Tuesday.
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-- Written by a member of TheStreet Ratings Staff
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