Why Alliance Fiber Optic Products (AFOP) is Suffering Double-Digit Damage

NEW YORK (TheStreet) -- Micro-cap Alliance Fiber Optic Products (AFOP) is suffering double-digit percentage loss on Tuesday after missing earnings estimates a day earlier. By midafternoon, shares had plunged 21.9% to $12.13.

After the bell Monday, the semiconductor company reported fourth-quarter net income of 28 cents a share, missing consensus by 4 cents according to analysts surveyed by Thomson Reuters. Quarterly revenue of $21.8 million, though an impressive 79.3% year-over-year increase, was short estimates by nearly 4%.

The company recorded full-year net income of 99 cents a share, 4 cents short of consensus, and $76.07 million in revenue, compared to estimates of $76.95 million.

"With the strong quarterly sales in the last three quarters of 2013, overall annual revenues grew 63% to a new record level. With our operational efficiency, quarterly gross margins continued improving throughout the year, which resulted in the improved annual gross margin, from 34% in 2012 to over 38% this year," said CEO Peter Chang in a statement.

Chang said based on current bookings first-quarter revenue is expected to be higher than $22.5 million, an at least 85% year-over-year increase. Analysts anticipate total sales of $22.57 million.

TheStreet Ratings team rates ALLIANCE FIBER OPTIC PRODUCT as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate ALLIANCE FIBER OPTIC PRODUCT (AFOP) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, notable return on equity, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

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