NEW YORK ( TheStreet) -- Immersion Corporation (Nasdaq: IMMR) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- IMMR 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 7.25, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has increased to -$0.95 million or 31.87% when compared to the same quarter last year. Despite an increase in cash flow, IMMERSION CORP's cash flow growth rate is still lower than the industry average growth rate of 81.30%.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, IMMR has underperformed the S&P 500 Index, declining 11.66% 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.
- 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 decreased by 24.6% when compared to the same quarter one year ago, dropping from -$1.13 million to -$1.41 million.
-- Written by a member of TheStreet RatingsStaff