How Will Supercom (SPCB) Stock React To 2014 First Quarter Earnings Results?

NEW YORK (TheStreet) -- Supercom Ltd.  (SPCB), a radio frequency identification management solutions provider, reported an increase in revenue to $5.3 million for the 2014 first quarter, compared to $2 million from the same period last year.

However, net income for the quarter was $1.3 million, compared to $1.4 million from the year ago quarter.

Earnings per basic share were 10 cents for the 2014 first quarter versus 17 cents for the 2013 first quarter.

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Earnings per diluted share were 10 cents for 2014 and 15 cents for the first quarter 2013.

Shares of Supercom closed lower by -5.33% to $9.05 on Monday.

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

"We rate SUPERCOM LTD (SPCB) a BUY. This is driven by several positive factors, 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 solid stock price performance, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. 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:

  • Compared to its closing price of one year ago, SPCB's share price has jumped by 786.87%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SPCB should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for SUPERCOM LTD is rather high; currently it is at 65.54%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SPCB's net profit margin of 29.36% significantly outperformed against the industry.
  • SPCB'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. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.75 is somewhat weak and could be cause for future problems.
  • SUPERCOM LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, SUPERCOM LTD increased its bottom line by earning $0.66 versus $0.64 in the prior year.
  • SPCB, with its decline in revenue, underperformed when compared the industry average of 9.4%. Since the same quarter one year prior, revenues slightly dropped by 9.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: SPCB Ratings Report
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