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 deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Highlights from the ratings report include:
- 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 Communications Equipment industry. The net income has significantly decreased by 135.3% when compared to the same quarter one year ago, falling from -$4.90 million to -$11.53 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Communications Equipment industry and the overall market, GILAT SATELLITE NETWORKS LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- The share price of GILAT SATELLITE NETWORKS LTD has not done very well: it is down 22.83% 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.
- GILAT SATELLITE NETWORKS LTD 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. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, GILAT SATELLITE NETWORKS LTD swung to a loss, reporting -$0.15 versus $0.73 in the prior year. This year, the market expects an improvement in earnings ($0.19 versus -$0.15).
- 42.50% is the gross profit margin for GILAT SATELLITE NETWORKS LTD which we consider to be strong. Regardless of GILT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GILT's net profit margin of -12.30% significantly underperformed when compared to the industry average.
Gilat Satellite Networks Ltd. provides Internet Protocol (IP) based digital satellite communication and networking products and services worldwide. The company has a P/E ratio of 4.7, below the average telecommunications industry P/E ratio of 404 and below the S&P 500 P/E ratio of 17.7. Gilat Satellite has a market cap of $165.9 million and is part of the
industry. Shares are up 5.1% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff