Pendrell Corp Stock Upgraded (PCO)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model

NEW YORK ( TheStreet) -- Pendrell (Nasdaq: PCO) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity.

Highlights from the ratings report include:
  • PCO's very impressive revenue growth greatly exceeded the industry average of 15.8%. Since the same quarter one year prior, revenues leaped by 10563.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • PCO 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 30.42, which clearly demonstrates the ability to cover short-term cash needs.
  • PCO'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 50.84%, 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.
  • 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 Professional Services industry and the overall market on the basis of return on equity, PENDRELL CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

Pendrell Corporation, through its wholly-owned subsidiary, Pendrell Technologies, Inc., provides corporate intellectual property solutions and litigation insights to Fortune 500 companies and technology firms worldwide. It engages in the valuation and acquisition of patents. Pendrell has a market cap of $251.1 million and is part of the technology sector and telecommunications industry.

You can view the full Pendrell Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model
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