NEW YORK (TheStreet) -- Seagate Technology (STX) - Get Report shares are slumping 3.48% to $37.97 on Thursday ahead of the company's first quarter fiscal 2016 earnings results due out before the market opens on Friday.
Based in Dublin, Ireland, Seagate Technology designs, manufactures, and sells electronic data storage products.
Both the company's profit and revenue are projected to drop year-over-year.
For the latest quarter, analysts are expecting the company to earn 59 cents a share on revenue of $2.94 billion.
In the same period the year before, the company earned $1.34 a share on revenue of $3.76 billion.
Headwinds include competition from Western Digital Corp. (WD) and SanDisk Corp. (SNDK), along with global macroeconomic conditions, according to Zacks Equity Research.
Last week, the company received clearance from China's Ministry of Commerce (MOFCOM) to integrate Samsung's (SSNLF) hard disk drive business into Seagate.
Separately, TheStreet Ratings team rates SEAGATE TECHNOLOGY PLC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate SEAGATE TECHNOLOGY PLC (STX) 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 notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 Computers & Peripherals industry and the overall market, SEAGATE TECHNOLOGY PLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The revenue fell significantly faster than the industry average of 37.5%. Since the same quarter one year prior, revenues fell by 11.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for SEAGATE TECHNOLOGY PLC is currently lower than what is desirable, coming in at 32.58%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.67% significantly trails the industry average.
- Net operating cash flow has significantly decreased to $228.00 million or 60.48% 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: STX