Why NICE Systems (NICE) Stock Is Down Today

NEW YORK (TheStreet) -- NICE Systems (NICE) was falling -8.6% to $38.30 Thursday after missing analysts' estimates for earnings and revenue in the first quarter.

For the first quarter NICE Systems reported revenue of 57 cents a share, missing the Capital IQ Consensus Estimate of 61 cents by 4 cents. Revenue grew 1.9% from the year-ago quarter to $229 million. Analysts expected revenue of $235.9 million for the quarter.

Looking forward to full-year 2014 NICE Systems expects EPS of $2.68 to $2.80 a share, while analysts expect earnings of $2.79 for the year. The company forecasts revenue of $995 million to $1.03 billion for the year, compared to analysts' expectations of $1.02 billion.

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TheStreet Ratings team rates NICE SYSTEMS LTD as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NICE SYSTEMS LTD (NICE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • NICE's revenue growth has slightly outpaced the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 13.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • NICE 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 1.08, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $46.55 million or 10.63% when compared to the same quarter last year. In addition, NICE SYSTEMS LTD has also modestly surpassed the industry average cash flow growth rate of 8.73%.
  • The gross profit margin for NICE SYSTEMS LTD is rather high; currently it is at 59.62%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, NICE's net profit margin of 8.96% significantly trails the industry average.
  • NICE SYSTEMS LTD's earnings per share declined by 25.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, NICE SYSTEMS LTD reported lower earnings of $0.89 versus $1.09 in the prior year. This year, the market expects an improvement in earnings ($2.79 versus $0.89).
  • You can view the full analysis from the report here: NICE 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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