NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.
Highlights from the ratings report include:
- LRAD 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 7.90, which clearly demonstrates the ability to cover short-term cash needs.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, LRAD CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- This stock has managed to rise its share value by 162.63% over the past twelve months. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- The revenue fell significantly faster than the industry average of 15.5%. Since the same quarter one year prior, revenues fell by 18.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 1105.9% when compared to the same quarter one year ago, falling from $0.07 million to -$0.68 million.
LRAD Corporation designs, develops, and commercializes sound reproduction technologies and products primarily in North America, Europe, and Asia. The company has a P/E ratio of 12.3, below the average electronics industry P/E ratio of 13 and below the S&P 500 P/E ratio of 17.7. LRAD has a market cap of $71.5 million and is part of the
industry. Shares are down 11.2% year to date as of the close of trading on Tuesday.
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