NEW YORK (
-- Spansion Inc
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Highlights from the ratings report include:
- 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 92.6% when compared to the same quarter one year ago, falling from $341.76 million to $25.29 million.
- 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 Semiconductors & Semiconductor Equipment industry and the overall market, SPANSION INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The share price of SPANSION INC has not done very well: it is down 7.40% 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- SPANSION INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SPANSION INC turned its bottom line around by earning $4.48 versus -$3.19 in the prior year. For the next year, the market is expecting a contraction of 49.3% in earnings ($2.27 versus $4.48).
- CODE's debt-to-equity ratio of 0.74 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that CODE's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.09 is high and demonstrates strong liquidity.
Spansion Inc. engages in the design, development, manufacture, and sale of flash memory semiconductors worldwide. Spansion has a market cap of $853.1 million and is part of the
industry. Shares are down 31.6% year to date as of the close of trading on Monday.
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