Avid Technology Inc. Stock Upgraded (AVID)
NEW YORK (
)
(Nasdaq:
) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
Highlights from the ratings report include:
- AVID TECHNOLOGY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, AVID TECHNOLOGY INC continued to lose money by earning -$0.62 versus -$0.97 in the prior year. This year, the market expects an improvement in earnings ($0.53 versus -$0.62).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Computers & Peripherals industry. The net income increased by 311.4% when compared to the same quarter one year prior, rising from -$0.57 million to $1.21 million.
- AVID 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. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.87 is somewhat weak and could be cause for future problems.
- 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. Compared to other companies in the Computers & Peripherals industry and the overall market, AVID TECHNOLOGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- AVID'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 49.85%, 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. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
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Avid Technology, Inc. provides digital media content-creation products and solutions for film, video, audio, and broadcast professionals, as well as artists and home enthusiasts. The company has a P/E ratio of 45.5, above the S&P 500 P/E ratio of 17.7. Avid Technology has a market cap of $372.2 million and is part of the
sector and
industry. Shares are up 32.1% year to date as of the close of trading on Monday.
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-- Written by a member of TheStreet RatingsStaff
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