Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Emcore Corporation (Nasdaq: EMKR) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, unimpressive growth in net income, poor profit margins and feeble growth in its earnings per share.
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- The share price of EMCORE CORP has not done very well: it is down 24.78% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- 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 172.7% when compared to the same quarter one year ago, falling from $2.83 million to -$2.05 million.
- The gross profit margin for EMCORE CORP is currently lower than what is desirable, coming in at 27.60%. 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 -4.64% significantly underperformed when compared to the industry average.
- EMCORE CORP 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, EMCORE CORP turned its bottom line around by earning $0.20 versus -$1.65 in the prior year. For the next year, the market is expecting a contraction of 100.0% in earnings ($0.00 versus $0.20).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Communications Equipment industry and the overall market, EMCORE CORP's return on equity significantly trails that of both the industry average and the S&P 500.