NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 21.4%. Since the same quarter one year prior, revenues rose by 18.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- SYMM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.91, which clearly demonstrates the ability to cover short-term cash needs.
- 43.00% is the gross profit margin for SYMMETRICOM INC which we consider to be strong. Regardless of SYMM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SYMM's net profit margin of 3.60% is significantly lower than the same period one year prior.
- After a year of stock price fluctuations, the net result is that SYMM's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- 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 Communications Equipment industry. The net income has significantly decreased by 26.6% when compared to the same quarter one year ago, falling from $3.00 million to $2.20 million.
Symmetricom, Inc. provides timekeeping technologies, instruments, and solutions worldwide. Its Communications business unit provides timing technologies and services for communications infrastructure. The company has a P/E ratio of 39.5, equal to the average telecommunications industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Symmetricom has a market cap of $230.1 million and is part of the
industry. Shares are up 3.7% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.