Why Maxwell Technologies (MXWL) is Soaring

NEW YORK (TheStreet) -- Maxwell Technologies (MXWL) saw a double-digit percentage gain on Friday, after investment house Piper Jaffray upgraded the stock to "overweight" from "neutral" with an $11 price target from $8.50. 

By mid-afternoon, shares had gained 12.2% to $9.08, adding to an overall 17.9% increase since the beginning of the year. 

The electronic components maker is due to report fourth-quarter and full-year earnings in late February. According to analysts surveyed by Yahoo! Finance, the San Diego-based business is expected to see fourth-quarter net loss for the period ended December 2013 of 4 cents a share on revenue of $36.51 million. 

For fiscal 2013, analysts anticipate net income of 28 cents a share on $191.09 million in revenue. 

TheStreet Ratings team rates MAXWELL TECHNOLOGIES INC as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate MAXWELL TECHNOLOGIES INC (MXWL) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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 impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 0.9%. Since the same quarter one year prior, revenues rose by 19.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MXWL's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.41, which illustrates the ability to avoid short-term cash problems.
  • The net income growth from the same quarter one year ago has exceeded that of the Electronic Equipment, Instruments & Components industry average, but is less than that of the S&P 500. The net income increased by 15.3% when compared to the same quarter one year prior, going from $5.23 million to $6.03 million.
  • 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. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, MAXWELL TECHNOLOGIES INC's return on equity is below that of both the industry average and the S&P 500.
  • MXWL has underperformed the S&P 500 Index, declining 10.34% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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