NEW YORK (TheStreet) -- Shares of Smith Micro Software (SMSI) - Get Report were gaining 16% to $1.46 Wednesday after the software company announced preliminary fourth quarter revenue results and a revenue guidance for fiscal 2015.
Smith Micro said that it expects to report revenue of $10.4 million to $10.6 million for the fourth quarter, above the Capital IQ Consensus Estimate of $10.11 million for the quarter.
The software company expects revenue of between $45 million and $49 million for fiscal 2015, which is above analysts' estimates of $42.97 million for the fiscal year.
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"We are very excited about our return to profitability, solid sequential revenue growth, and new deals that will continue to increase revenues next year and hopefully for years to come," president and CEO William W. Smith Jr. said in a statement. "As we look to fiscal 2015, our expectation is that we will remain profitable for the entire year while achieving steady quarterly revenue growth throughout the year."
Smith Micro will announce its fourth quarter results on Feb. 24.
TheStreet Ratings team rates SMITH MICRO SOFTWARE INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate SMITH MICRO SOFTWARE INC (SMSI) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SMSI's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 31.40%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- 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 Software industry and the overall market, SMITH MICRO SOFTWARE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- SMITH MICRO SOFTWARE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SMITH MICRO SOFTWARE INC reported poor results of -$0.75 versus -$0.71 in the prior year. This year, the market expects an improvement in earnings (-$0.13 versus -$0.75).
- The gross profit margin for SMITH MICRO SOFTWARE INC is currently very high, coming in at 84.10%. 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 -12.08% is in-line with the industry average.
- Net operating cash flow has significantly increased by 124.48% to $1.16 million when compared to the same quarter last year. In addition, SMITH MICRO SOFTWARE INC has also vastly surpassed the industry average cash flow growth rate of 11.40%.
- You can view the full analysis from the report here: SMSI Ratings Report