Why Logitech (LOGI) Is Surging Today

NEW YORK (TheStreet) -- Logitech (LOGI) hit a three-year high, gaining 21% to $16 on Thursday following a much better-than-expected earnings report and the company raising 2014 guidance.

In its fiscal third-quarter results Logitech said its earnings came in at 35 cents a share with revenue totaling $627.9 million. A Thomson Reuters analyst survey estimated earnings of 17 cents a share with revenue of $599.6 million for the quarter.

Logitech raised its guidance for all of fiscal 2014 due to its third-quarter results. The computer accessory maker now expects revenue of about $2.1 billion in fiscal 2014, up from a previous guidance of $2 billion.

TheStreet Ratings team rates LOGITECH INTERNATIONAL SA as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate LOGITECH INTERNATIONAL SA (LOGI) 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 solid stock price performance, 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 deteriorating net income, disappointing return on equity and weak operating cash flow."

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

  • Compared to its closing price of one year ago, LOGI's share price has jumped by 90.94%, exceeding the performance of the broader market during that same time frame. Although LOGI had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • LOGI 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.11, which illustrates the ability to avoid short-term cash problems.
  • 38.16% is the gross profit margin for LOGITECH INTERNATIONAL SA which we consider to be strong. Regardless of LOGI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LOGI's net profit margin of 2.70% is significantly lower than the industry average.
  • 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 Computers & Peripherals industry and the overall market, LOGITECH INTERNATIONAL SA's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $15.49 million or 4.07% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: LOGI Ratings Report

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