NEW YORK (TheStreet) -- Mellanox Technologies (MLNX) shares are down -15.4% to $33.58 in trading on Friday following the release of the company's first quarter earnings results.
The server and storage systems solutions provider reported revenues of $98.7 million, in line with analysts guidance, but down 6.5% from the previous quarter.
Non-GAAP net income for the quarter was $4.5 million, or 10 cents per diluted share, missing analysts quarterly estimate by 1 cent.
TheStreet Ratings team rates MELLANOX TECHNOLOGIES LTD as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MELLANOX TECHNOLOGIES LTD (MLNX) 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 largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MLNX's debt-to-equity ratio is very low at 0.00 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 4.02, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has increased to $30.73 million or 21.02% when compared to the same quarter last year. In addition, MELLANOX TECHNOLOGIES LTD has also vastly surpassed the industry average cash flow growth rate of -71.56%.
- The gross profit margin for MELLANOX TECHNOLOGIES LTD is currently very high, coming in at 73.80%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -6.87% is in-line with the industry average.
- 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 139.3% when compared to the same quarter one year ago, falling from $18.44 million to -$7.25 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 Semiconductors & Semiconductor Equipment industry and the overall market, MELLANOX TECHNOLOGIES LTD'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: MLNX Ratings Report