Why Sonus Networks (SONS) is Up Today

NEW YORK (TheStreet) -- Sonus Networks (SONS) was gaining 7.3% to $3.68 Thursday after the communications equipment producer posted fourth-quarter results that beat analyst expectations for revenue.

For the quarter, Sonus posted earnings of 2 cents a share, matching analysts' earnings estimates for the quarter. Revenue rose 1.5% from the year-ago quarter to $76.2 million, beating analysts' expectations of $72.72 million.

Looking to the first quarter, Sonus expects a loss of 1 cent a share, with revenue of $70 million. Analysts expect a loss of 1 cent a share and revenue of $65.10 million.

For the full-year 2014 Sonus expects earnings of 5 cents a share, and revenue of $300 million. Analysts expect earnings of 5 cents a share and revenue of $286.73 million for the year.

Must read: Interesting SONS Put Options For March 22nd

TheStreet Ratings team rates SONUS NETWORKS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate SONUS NETWORKS INC (SONS) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

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

  • The revenue growth came in higher than the industry average of 3.6%. Since the same quarter one year prior, revenues rose by 19.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SONS's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.20, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • SONUS NETWORKS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SONUS NETWORKS INC reported poor results of -$0.18 versus -$0.04 in the prior year. This year, the market expects an improvement in earnings ($0.02 versus -$0.18).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Communications Equipment industry and the overall market, SONUS NETWORKS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: SONS Ratings Report

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