NEW YORK (TheStreet) -- Shares of Wave Systems Corp.  (WAVX) closed at $1.71 on heavy volume trading following the recent announcement that its management software has been validated for use with SanDisk's (SNDK)  new self-encrypting solid state drive (SSD) for corporate environments, the SanDisk X300s SSD.

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TheStreet Ratings team rates WAVE SYSTEMS CORP as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate WAVE SYSTEMS CORP (WAVX) 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:

  • WAVX has underperformed the S&P 500 Index, declining 20.11% from its price level of one year ago. 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.
  • WAVX, with its decline in revenue, underperformed when compared the industry average of 6.6%. Since the same quarter one year prior, revenues slightly dropped by 8.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for WAVE SYSTEMS CORP is currently very high, coming in at 98.57%. 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 -61.76% is in-line with the industry average.
  • WAVE SYSTEMS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, WAVE SYSTEMS CORP continued to lose money by earning -$0.72 versus -$1.40 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 67.8% when compared to the same quarter one year prior, rising from -$10.21 million to -$3.29 million.
  • You can view the full analysis from the report here: WAVX Ratings Report

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STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.