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NEW YORK ( TheStreet) -- Emcore Corporation (Nasdaq: EMKR) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

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Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 83.14% to -$2.53 million when compared to the same quarter last year. In addition, EMCORE CORP has also modestly surpassed the industry average cash flow growth rate of 81.65%.
  • EMCORE CORP has improved earnings per share by 28.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EMCORE CORP reported poor results of -$1.65 versus -$1.48 in the prior year. This year, the market expects an improvement in earnings (-$0.29 versus -$1.65).
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • The gross profit margin for EMCORE CORP is rather low; currently it is at 18.35%. Regardless of EMKR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, EMKR's net profit margin of -21.75% significantly underperformed when compared to the industry average.

EMCORE Corporation, together with its subsidiaries, provides compound semiconductor-based products for the broadband, fiber optics, satellite, and solar power markets. The company operates in two segments, Fiber Optics and Photovoltaics. Emcore has a market cap of $147 million and is part of the technology sector and electronics industry. Shares are up 26% year to date as of the close of trading on Wednesday.

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

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