Why NeoPhotonics (NPTN) Is Up In After-Hours Trading Today

NEW YORK (TheStreet) -- NeoPhotonics (NPTN) shares are up 0.9% to $4.40 following the release of its first quarter earnings results after the bell on Tuesday, reporting earnings and revenue in line with Wall Street expectations.

The photonic integrated circuit manufacturer reported an adjust net loss of 30 cents per share, 13 cents worst than it reported a year ago, but in-line with analysts estimates. 

The company reported revenue of $68.2 million, up $12.1 million from the previous year and slightly ahead of the $68 million that was expected.

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

"We rate NEOPHOTONICS CORP (NPTN) a SELL. This is driven by a number of negative factors, 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 deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

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

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 48.9% when compared to the same quarter one year ago, falling from -$2.99 million to -$4.45 million.
  • 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 Semiconductors & Semiconductor Equipment industry and the overall market, NEOPHOTONICS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for NEOPHOTONICS CORP is currently lower than what is desirable, coming in at 32.95%. Regardless of NPTN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, NPTN's net profit margin of -5.98% significantly underperformed when compared to the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 44.89%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 40.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • NEOPHOTONICS CORP's earnings per share declined by 40.0% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, NEOPHOTONICS CORP reported poor results of -$1.11 versus -$0.68 in the prior year. This year, the market expects an improvement in earnings (-$0.64 versus -$1.11).
  • You can view the full analysis from the report here: NPTN Ratings Report
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