UTStarcom Holdings Corp Stock Downgraded (UTSI)

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) -- UTStarcom Holdings (Nasdaq: UTSI) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

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Highlights from the ratings report include:
  • 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 Communications Equipment industry. The net income has significantly decreased by 359.1% when compared to the same quarter one year ago, falling from $8.01 million to -$20.76 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Communications Equipment industry and the overall market, UTSTARCOM HOLDINGS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 47.86%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 380.00% compared to the year-earlier 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.
  • UTSTARCOM HOLDINGS CORP 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. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, UTSTARCOM HOLDINGS CORP turned its bottom line around by earning $0.08 versus -$0.47 in the prior year.
  • UTSI, with its very weak revenue results, has greatly underperformed against the industry average of 3.5%. Since the same quarter one year prior, revenues plummeted by 51.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
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UTStarcom Holdings Corp. designs and sells Internet protocol (IP)-based telecommunications infrastructure products to telecommunications service providers and operators worldwide. The company has a P/E ratio of -3.5, below the S&P 500 P/E ratio of 17.7. UTStarcom has a market cap of $155.4 million and is part of the technology sector and telecommunications industry. Shares are down 26.7% year to date as of the close of trading on Friday.

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

-- Written by a member of TheStreet Ratings Staff

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