Why Aceto (ACET) Stock Is Falling Today

NEW YORK (TheStreet) -- Aceto (ACET) was falling -15.5% to $19.45 Friday after missing analysts' expectations for earnings and revenue for the fiscal third quarter.

For the third quarter Aceto posted earnings of 19 cents a share, missing the Capital IQ Consensus Estimate of 28 cents a share by 9 cents. Revenue fell -17.3% year-over-year to $124.8 million for the quarter. Analysts expected revenue of $136.7 million for the quarter.

"The third quarter of fiscal 2014 earnings performance was below that achieved last year primarily as a result of quarterly timing," Aceto CEO Sal Guccino said in a press release.

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TheStreet Ratings team rates ACETO CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ACETO CORP (ACET) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins."

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

  • ACET's revenue growth has slightly outpaced the industry average of 2.0%. Since the same quarter one year prior, revenues slightly increased by 2.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ACET's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, ACET has a quick ratio of 1.53, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Powered by its strong earnings growth of 41.17% and other important driving factors, this stock has surged by 117.04% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ACET should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • ACETO CORP has improved earnings per share by 41.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ACETO CORP increased its bottom line by earning $0.82 versus $0.63 in the prior year. This year, the market expects an improvement in earnings ($1.13 versus $0.82).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Trading Companies & Distributors industry average. The net income increased by 49.7% when compared to the same quarter one year prior, rising from $4.51 million to $6.76 million.
  • You can view the full analysis from the report here: ACET 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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