NEW YORK ( TheStreet) -- O2Micro International Ltd. ADR (Nasdaq: OIIM) 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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- O2MICRO INTERNATIONAL LTD has exprienced 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, O2MICRO INTERNATIONAL LTD reported lower earnings of $0.27 versus $0.62 in the prior year. For the next year, the market is expecting a contraction of 166.7% in earnings (-$0.18 versus $0.27).
- 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 469.5% when compared to the same quarter one year ago, falling from $2.96 million to -$10.94 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 Semiconductors & Semiconductor Equipment industry and the overall market, O2MICRO INTERNATIONAL LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- The share price of O2MICRO INTERNATIONAL LTD has not done very well: it is down 15.58% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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 gross profit margin for O2MICRO INTERNATIONAL LTD is rather high; currently it is at 55.70%. Regardless of OIIM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OIIM's net profit margin of -38.60% significantly underperformed when compared to the industry average.
-- Written by a member of TheStreet Ratings Staff