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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 feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.
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Highlights from the ratings report include:
- RICHARDSON ELECTRONICS LTD has experienced 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. During the past fiscal year, RICHARDSON ELECTRONICS LTD swung to a loss, reporting -$0.04 versus $0.04 in the prior year.
- 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 1267.4% when compared to the same quarter one year ago, falling from -$0.18 million to -$2.48 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, RICHARDSON ELECTRONICS LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for RICHARDSON ELECTRONICS LTD is currently lower than what is desirable, coming in at 29.57%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -6.99% is significantly below that of the industry average.
- The share price of RICHARDSON ELECTRONICS LTD has not done very well: it is down 13.72% 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
Richardson Electronics, Ltd. provides engineered solutions, power grid microwave tubes and related components, and customized display solutions. Richardson has a market cap of $122.1 million and is part of the services sector and wholesale industry. Shares are down 7.1% year to date as of the close of trading on Monday.
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