NEW YORK ( TheStreet) -- AXT (Nasdaq: AXTI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- AXT INC has improved earnings per share by 11.8% 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, AXT INC turned its bottom line around by earning $0.57 versus -$0.06 in the prior year. This year, the market expects an improvement in earnings ($0.63 versus $0.57).
- AXTI's revenue growth trails the industry average of 18.2%. Since the same quarter one year prior, revenues slightly increased by 5.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market on the basis of return on equity, AXT INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The net income growth from the same quarter one year ago has exceeded that of the Semiconductors & Semiconductor Equipment industry average, but is less than that of the S&P 500. The net income increased by 15.0% when compared to the same quarter one year prior, going from $5.64 million to $6.48 million.
- AXTI's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 55.48%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.