Why Fusion-IO (FIO) Stock Is Falling Today

NEW YORK (TheStreet) -- Fusion-IO (FIO) shares are down -12% to $8.52 in trading on Thursday following the release of the company's third quarter earnings report.

The data center and cloud computing services provider posted a net income loss of -$10.5 million, or -10 cents per share for the quarter, missing analysts estimates by 1 cent.

The company posted quarterly revenue of $100.5 million, a year over year quarterly increase of 14.5%, in line with analysts estimates.

Must Read: Warren Buffett's 10 Favorite Stocks

SELL NOW: If you own any of the 900 stocks that TheStreet Quant Ratings has identified as a 'Sell'...you could potentially lose EVERYTHING in the next 6-12 months. Learn more.

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

"We rate FUSION-IO INC (FIO) 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 Computers & Peripherals industry. The net income has significantly decreased by 1329.8% when compared to the same quarter one year ago, falling from $1.73 million to -$21.30 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 Computers & Peripherals industry and the overall market, FUSION-IO 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 35.11%, 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.
  • FUSION-IO 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FUSION-IO INC reported poor results of -$0.39 versus -$0.08 in the prior year. This year, the market expects an improvement in earnings (-$0.28 versus -$0.39).
  • FIO, with its decline in revenue, underperformed when compared the industry average of 4.7%. Since the same quarter one year prior, revenues fell by 21.6%. 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: FIO Ratings Report
STOCKS TO BUY: TheStreet's Stocks Under $10 has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more. 

More from Markets

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

Flashback Friday: The Market Movers

Flashback Friday: The Market Movers