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NEW YORK (TheStreet) -- Shares of JDS Uniphase (JDSU) were gaining 4.1% to $13.87 Friday after rival communication equipment company Finisar's (FNSR) - Get Finisar Corporation Report fiscal third quarter results and strong fiscal fourth quarter guidance.

Finisar reported earnings of 25 cents a share for the fiscal third quarter, in line with analysts' estimates. The company reported earnings of 4.2% year over year to $306.28 million for the quarter, compared to analysts' estimates of $305.79 million.

Finisar said it expects earnings of 22 cents to 28 cents a share and revenue of $310 million to $330 million for the fiscal fourth quarter. Analysts expect the company to report earnings of 23 cents and revenue of $307.9 million for the quarter.

Shares of Finisar were gaining 8.2% to $22 following its quarterly results and guidance.

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About 3.1 million shares of JDS Uniphase were traded by 12:02 p.m. Friday, above its average trading volume of about 2.6 million shares a day.

TheStreet Ratings team rates JDS UNIPHASE CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate JDS UNIPHASE CORP (JDSU) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for JDS UNIPHASE CORP is rather high; currently it is at 53.31%. 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 -5.74% is in-line with the industry average.
  • Despite currently having a low debt-to-equity ratio of 0.48, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.94 is very high and demonstrates very strong liquidity.
  • JDSU, with its decline in revenue, slightly underperformed the industry average of 0.5%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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, JDS UNIPHASE 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 $16.60 million or 69.48% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: JDSU Ratings Report