Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- LTX-Credence Corporation (Nasdaq: LTXC) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and generally disappointing historical performance in the stock itself.
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- 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 443.6% when compared to the same quarter one year ago, falling from $1.36 million to -$4.66 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 25.27%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 433.33% 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.
- 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, LTX-CREDENCE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for LTX-CREDENCE CORP is rather high; currently it is at 52.24%. Regardless of LTXC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LTXC's net profit margin of -12.40% significantly underperformed when compared to the industry average.
- LTXC, with its decline in revenue, slightly underperformed the industry average of 13.4%. Since the same quarter one year prior, revenues fell by 13.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.