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 and generally disappointing historical performance in the stock itself.
Highlights from the ratings report include:
- STEC 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, STEC INC reported lower earnings of $0.46 versus $0.55 in the prior year. For the next year, the market is expecting a contraction of 256.5% in earnings (-$0.72 versus $0.46).
- 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 Computers & Peripherals industry. The net income has significantly decreased by 175.6% when compared to the same quarter one year ago, falling from $14.15 million to -$10.69 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 Computers & Peripherals industry and the overall market, STEC INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 50.14%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 185.18% 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.
- 43.70% is the gross profit margin for STEC INC which we consider to be strong. Regardless of STEC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, STEC's net profit margin of -21.20% significantly underperformed when compared to the industry average.
STEC, Inc. designs, manufactures, and markets enterprise-class solid-state drives (SSDs), flash cards, and flash modules for use in high-performance enterprise applications, and high-density DRAM modules for networking, communications, and industrial applications. The company has a P/E ratio of 16.1, below the S&P 500 P/E ratio of 17.7. STEC has a market cap of $344.8 million and is part of the
industry. Shares are down 14.1% year to date as of the close of trading on Tuesday.
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-- Written by a member of TheStreet Ratings Staff