Why Intermolecular (IMI) Is Down Today

NEW YORK (TheStreet) -- Intermolecular  (IMI) plummeted to a one-year low of $2.79 on Friday after the company, which works in research and development for semiconductor and clean energy industries, announced that its development activity on the Collaborative Development Program agreement with SanDisk (SNDK) and Toshiba had come to an end.

"The objective of the CDP was to prepare certain memory technology for future production, and we are proud to have worked with SanDisk and Toshiba over the last four years to achieve the goal of our collaboration," said Intermolecular President and CEO Dave Lazovsky in a company statement. "We believe that we have helped them develop such memory technology with the potential to be the industry leader in non-volatile memory capability."

More than 5 million shares traded hands on Friday morning; the stock's daily average is 172,951.

Must Read: Intermolecular Announces New Developments In The SanDisk/Toshiba Relationship

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TheStreet Ratings team rates INTERMOLECULAR INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate INTERMOLECULAR INC (IMI) 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 deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 980.1% when compared to the same quarter one year ago, falling from $0.50 million to -$4.42 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, INTERMOLECULAR INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 60.15%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1100.00% 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.
  • INTERMOLECULAR INC 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, INTERMOLECULAR INC reported poor results of -$0.20 versus -$0.01 in the prior year. This year, the market expects an improvement in earnings (-$0.12 versus -$0.20).
  • IMI, with its decline in revenue, underperformed when compared the industry average of 5.9%. Since the same quarter one year prior, revenues fell by 10.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: IMI Ratings Report

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