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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.
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Highlights from the ratings report include:
- VOLCANO CORP has experienced 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 year. We anticipate that this should continue in the coming year. During the past fiscal year, VOLCANO CORP reported lower earnings of $0.14 versus $0.70 in the prior year. For the next year, the market is expecting a contraction of 64.3% in earnings ($0.05 versus $0.14).
- 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 Health Care Equipment & Supplies industry. The net income has significantly decreased by 528.1% when compared to the same quarter one year ago, falling from $1.98 million to -$8.46 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 Health Care Equipment & Supplies industry and the overall market, VOLCANO CORP'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 30.26%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 475.00% 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.
- VOLC's debt-to-equity ratio of 0.96 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. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 6.28 is very high and demonstrates very strong liquidity.
Volcano Corporation designs, develops, manufactures, and commercializes a suite of precision guided therapy tools primarily to physicians, nurses, and technicians worldwide. Volcano has a market cap of $1.11 billion and is part of the health care sector and health services industry. Shares are down 14.1% year to date as of the close of trading on Wednesday.
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