Why Senomyx (SNMX) Stock Is Up Today

NEW YORK (TheStreet) -- Senomyx (SNMX) was gaining 8.2% to $11.05 following the announcement of a new partnership with PepsiCo (PEP).

Under the new partnership Pepsi will fund Senomyx's Salt Taste Program for 2014. Pepsi will gain non-exclusive rights to the salt flavor modifiers during the funding period, and Senomyc will have the right to supply the flavors directly to the soda maker.

Financial terms of the agreement were not disclosed.

"We are pleased to establish this new type of research agreement, which provides research funding to Senomyx while retaining our ability to add potential new flavor offerings to our direct sales portfolio," Senomyx president and CEO John Poyhonen said in a press release.

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

"We rate SENOMYX INC (SNMX) a SELL. This is driven by a few notable 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 and disappointing return on equity."

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

  • SENOMYX 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, SENOMYX INC reported poor results of -$0.24 versus -$0.22 in the prior year. For the next year, the market is expecting a contraction of 4.2% in earnings (-$0.25 versus -$0.24).
  • 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 Chemicals industry. The net income has significantly decreased by 71.4% when compared to the same quarter one year ago, falling from -$2.03 million to -$3.48 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 Chemicals industry and the overall market, SENOMYX INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • SNMX, with its decline in revenue, underperformed when compared the industry average of 12.6%. Since the same quarter one year prior, revenues fell by 15.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • SNMX has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.45, which illustrates the ability to avoid short-term cash problems.
  • You can view the full analysis from the report here: SNMX Ratings Report

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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.

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