BlackBerry (BBRY), Plug Power (PLUG) Hit Hard on Grim Day for Stocks

NEW YORK (TheStreet) -- BlackBerry (BBRY) and Plug Power (PLUG) have plunged on a day already a hard slog for stocks. By early afternoon, BlackBerry had taken off 4.9% to $8.98, while Plug Power was down 5.6% to $2.85. Neither company had released news, but susceptibility to selling-off on market tremors likely contributed to a larger-than-normal drop.

The S&P 500 had sunk 1.68% to 1,752.71 by Monday afternoon on the release of weak U.S. manufacturing data and poor auto sales.

Earlier in the day, the Institute for Supply Management said manufacturing growth in the U.S. over January had dropped to 51.3 from 56.5 in December, an eight-month low. New order growth fell by the most in 33 years to 51.2 from 64.4.

Adding to concerns of a weakening national economy, Ford (F) and General Motors (GM) reported worse-than-expected auto sales over January. Ford said unit sales plummeted 7.1% to 154,000, while General Motors' unit sales sunk 12% to 171,000. The automakers blamed wintery weather and icy conditions over the last month for a lack of customers.

Prior to Monday, BlackBerry had climbed 27% since the beginning of the year as investors gained confidence a turnaround could take root under new CEO John Chen's direction.

Meanwhile, Plug Power was up 94.8% year to date after announcing contracts from Wal-Mart (WMT), Kroger (KR), Coca-Cola (KO) and Procter & Gamble (PG), as well as a new public offering of 10 million shares earlier in January.

TheStreet Ratings team rates BLACKBERRY LTD as a Sell with a ratings score of D. The team has this to say about their recommendation:

"We rate BLACKBERRY LTD (BBRY) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."

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

  • BLACKBERRY LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, BLACKBERRY LTD swung to a loss, reporting -$1.20 versus $2.24 in the prior year.
  • 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 49000.0% when compared to the same quarter one year ago, falling from $9.00 million to -$4,401.00 million.
  • 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 Communications Equipment industry and the overall market, BLACKBERRY LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$81.00 million or 108.45% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 29.00%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 28000.00% 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.

TheStreet Ratings team rates PLUG POWER INC as a Sell with a ratings score of D-. The team has this to say about their recommendation:

"We rate PLUG POWER INC (PLUG) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and disappointing return on equity."

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

  • 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 Electrical Equipment industry. The net income has significantly decreased by 54.0% when compared to the same quarter one year ago, falling from -$10.33 million to -$15.90 million.
  • 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 Electrical Equipment industry and the overall market, PLUG POWER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • PLUG, with its decline in revenue, underperformed when compared the industry average of 9.5%. Since the same quarter one year prior, revenues slightly dropped by 3.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • PLUG's debt-to-equity ratio of 0.85 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.21 is sturdy.
  • Net operating cash flow has slightly increased to -$7.01 million or 1.82% when compared to the same quarter last year. Despite an increase in cash flow, PLUG POWER INC's cash flow growth rate is still lower than the industry average growth rate of 17.53%.

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