Why magicJack VocalTec (CALL) Stock Is Down Today

NEW YORK (TheStreet) -- MagicJack VocalTec (CALL) was falling -8.7% to $17.37 Tuesday after missing analysts' expectations for revenue in the first quarter.

For the first quarter megicJack reported EPS of 53 cents a share, beating the Capital IQ Consensus Estimate of 49 cents a share by 4 cents. Revenue fell -4.3% year-over-year to $35.31 million, while analysts expected revenue of $37.18 million for the quarter.

Looking forward to full-year 2014 magicJack expects revenue of $158 million to $163 million. Analysts expect revenue of $157.5 million for the year.

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TheStreet Ratings team rates MAGICJACK VOCALTEC LTD as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate MAGICJACK VOCALTEC LTD (CALL) 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 notable return on equity, compelling growth in net income, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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

  • Compared to other companies in the Diversified Telecommunication Services industry and the overall market, MAGICJACK VOCALTEC LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 103.5% when compared to the same quarter one year prior, rising from $22.27 million to $45.31 million.
  • The gross profit margin for MAGICJACK VOCALTEC LTD is rather high; currently it is at 67.52%. Regardless of CALL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CALL's net profit margin of 118.68% significantly outperformed against the industry.
  • CALL's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.86 is somewhat weak and could be cause for future problems.
  • MAGICJACK VOCALTEC LTD reported significant earnings per share improvement 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, MAGICJACK VOCALTEC LTD increased its bottom line by earning $3.84 versus $2.83 in the prior year. For the next year, the market is expecting a contraction of 57.2% in earnings ($1.65 versus $3.84).
  • You can view the full analysis from the report here: CALL Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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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