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 weak operating cash flow and generally disappointing historical performance in the stock itself.
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Highlights from the ratings report include:
- Net operating cash flow has decreased to -$14.00 million or 27.17% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- CRNT'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 44.07%, 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.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Communications Equipment industry and the overall market, CERAGON NETWORKS LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- CERAGON NETWORKS LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CERAGON NETWORKS LTD swung to a loss, reporting -$1.50 versus $0.39 in the prior year. This year, the market expects an improvement in earnings ($0.40 versus -$1.50).
- 36.50% is the gross profit margin for CERAGON NETWORKS LTD 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 -0.90% is in-line with the industry average.
Ceragon Networks Ltd. provides wireless backhaul solutions that enable cellular operators and other wireless service providers to deliver voice and data services worldwide. Ceragon has a market cap of $212.9 million and is part of the
industry. Shares are down 23.9% year to date as of the close of trading on Monday.
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-- Written by a member of TheStreet Ratings Staff
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