Why CalAmp (CAMP) Stock Is Sinking On Wednesday

NEW YORK (TheStreet) -- Shares of CalAmp Corp. (CAMP) are declining by -12.69% to $19.26 in mid-morning trading today after the company issued weak guidance for its fiscal 2015 second quarter.

For the second quarter, the developer and marketer of wireless technology solutions is expecting earnings per diluted share to be 19 cents on revenue close to $59 million.

Analysts are expecting earnings of 22 cents per share on revenue of nearly $63 million, Motley Fool reports.

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However, on Tuesday after the close, CalAmp reported strong earnings for the fiscal 2015 first quarter of $2.7 million, or 7 cents per diluted share on a GAAP basis, compared to $1.7 million, or 5 cents per diluted share for the fiscal 2014 first quarter.

Adjusted non-GAAP earnings were $6.9 million, or 19 cents per diluted share versus $5.6 million, or 16 cents per diluted share for the year ago period.

Total revenue increased to $59 million for the fiscal 2015 first quarter, compared to $53.7 million for the fiscal 2014 first quarter.

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

"We rate CALAMP CORP (CAMP) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures, 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:

  • The revenue growth came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues rose by 23.7%. 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.
  • CAMP's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CAMP has a quick ratio of 1.53, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 35.24% is the gross profit margin for CALAMP CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CAMP's net profit margin of 5.12% significantly trails the industry average.
  • Compared to its closing price of one year ago, CAMP's share price has jumped by 53.96%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • CALAMP CORP 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. 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, CALAMP CORP reported lower earnings of $0.33 versus $1.46 in the prior year. This year, the market expects an improvement in earnings ($0.98 versus $0.33).
  • You can view the full analysis from the report here: CAMP Ratings Report
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