Why Accuray (ARAY) Stock Is Down Today

NEW YORK (TheStreet) -- Accuray (ARAY) shares are down -8.4% to $7.70 on Thursday following the release of its third quarter earnings results.

The company reported a year over year quarterly revenue increase of 38% to $97.1 million, beating analysts estimates of $84.3 million.

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Net loss for the quarter totaled -$4.7 million, or -6 cents per diluted share, also beating consensus estimates by 9 cents.

The image-guided radiosurgery device manufacturer also raised its full year guidance range to $355 million - $365 million from $340 million - $350 million.

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

"We rate ACCURAY INC (ARAY) a SELL. This is driven by several 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 disappointing return on equity and generally high debt management risk."

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

  • 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 Health Care Equipment & Supplies industry and the overall market, ACCURAY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 2.11 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, ARAY's quick ratio is somewhat strong at 1.36, demonstrating the ability to handle short-term liquidity needs.
  • ACCURAY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ACCURAY INC reported poor results of -$1.32 versus -$1.02 in the prior year. This year, the market expects an improvement in earnings (-$0.52 versus -$1.32).
  • 46.24% is the gross profit margin for ACCURAY INC which we consider to be strong. 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 -5.81% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 94.21% to -$1.66 million when compared to the same quarter last year. In addition, ACCURAY INC has also vastly surpassed the industry average cash flow growth rate of -15.11%.
  • You can view the full analysis from the report here: ARAY Ratings Report
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