Why Sequans Communications (SQNS) Stock is Down Today

NEW YORK (TheStreet) -- Sequans Communications  (SQNS) plunged Thursday after the LTE chipmaker reported first-quarter revenue that missed analysts' estimates and also issued second-quarter guidance that missed expectations.

The company reported a loss of 13 cents a share, which was in line with the Capital IQ consensus estimate. Revenues increased 96% year over year to $4.5 million but still came up short of analysts' estimate of $5 million.

Gross margin widened to 39.5% from 31.3% in the same quarter one year earlier.

For the second quarter, the company expects a loss of 15 cents a share to 13 cents a share, worse than the Capital IQ consensus estimate of a loss of 12 cents a share, and revenue of $5 million to $6 million, which comes up short of analysts' estimate of $7.03 million.

The stock was down 16.19% to $2.07 at 1:28 p.m.

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Separately, TheStreet Ratings team rates SEQUANS COMMUNICATIONS -ADR as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate SEQUANS COMMUNICATIONS -ADR (SQNS) 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. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity."

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

  • 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 Semiconductors & Semiconductor Equipment industry and the overall market, SEQUANS COMMUNICATIONS -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has exceeded that of the Semiconductors & Semiconductor Equipment industry average, but is less than that of the S&P 500. The net income increased by 16.0% when compared to the same quarter one year prior, going from -$9.91 million to -$8.33 million.
  • 43.75% is the gross profit margin for SEQUANS COMMUNICATIONS -ADR which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -166.70% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 95.77% to -$0.29 million when compared to the same quarter last year. In addition, SEQUANS COMMUNICATIONS -ADR has also vastly surpassed the industry average cash flow growth rate of -71.56%.
  • SQNS'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 3.22, which clearly demonstrates the ability to cover short-term cash needs.
  • You can view the full analysis from the report here: SQNS 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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