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NEW YORK (TheStreet) -- Emcore (EMKR) - Get Report has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate EMCORE CORP (EMKR) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been the company's poor growth in earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- EMCORE CORP has improved earnings per share by 23.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, EMCORE CORP reported lower earnings of $0.09 versus $0.20 in the prior year. For the next year, the market is expecting a contraction of 166.7% in earnings (-$0.06 versus $0.09).
- 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 Communications Equipment industry and the overall market on the basis of return on equity, EMCORE CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for EMCORE CORP is currently lower than what is desirable, coming in at 28.12%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, EMKR's net profit margin of 304.77% significantly outperformed against the industry.
- The stock has risen over the past year and, it has performed in line with the S&P 500 thus far. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- EMKR 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. Along with this, the company maintains a quick ratio of 3.55, which clearly demonstrates the ability to cover short-term cash needs.
- You can view the full analysis from the report here: EMKR Ratings Report