3 Stocks Pushing The Telecommunications Industry Lower

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The Telecommunications industry as a whole closed the day down 0.7% versus the S&P 500, which was down 0.9%. Laggards within the Telecommunications industry included Technical Communications ( TCCO), down 4.3%, Frequency Electronics ( FEIM), down 3.5%, Ikanos Communications ( IKAN), down 3.3%, Iteris ( ITI), down 2.4% and RRSat Global Communications Network ( RRST), down 5.8%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the industry lower today:

Iteris ( ITI) is one of the companies that pushed the Telecommunications industry lower today. Iteris was down $0.04 (2.4%) to $1.61 on light volume. Throughout the day, 30,178 shares of Iteris exchanged hands as compared to its average daily volume of 71,900 shares. The stock ranged in price between $1.61-$1.65 after having opened the day at $1.63 as compared to the previous trading day's close of $1.65.

Iteris, Inc. provides intelligent transportation systems solutions to the traffic management market worldwide. Iteris has a market cap of $54.7 million and is part of the technology sector. Shares are down 20.5% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Iteris as a hold. 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and weak operating cash flow.

Highlights from TheStreet Ratings analysis on ITI go as follows:

  • ITI's revenue growth has slightly outpaced the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 18.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ITI has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.72, which clearly demonstrates the ability to cover short-term cash needs.
  • ITERIS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, ITERIS INC's EPS of $0.03 remained unchanged from the prior years' EPS of $0.03. This year, the market expects an improvement in earnings ($0.06 versus $0.03).
  • Net operating cash flow has decreased to -$0.84 million or 23.88% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • ITI has underperformed the S&P 500 Index, declining 7.83% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

You can view the full analysis from the report here: Iteris Ratings Report

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At the close, Ikanos Communications ( IKAN) was down $0.01 (3.3%) to $0.36 on light volume. Throughout the day, 121,147 shares of Ikanos Communications exchanged hands as compared to its average daily volume of 235,200 shares. The stock ranged in price between $0.36-$0.39 after having opened the day at $0.36 as compared to the previous trading day's close of $0.38.

Ikanos Communications, Inc. designs, develops, markets, and sells semiconductors and integrated firmware products for the digital home worldwide. It offers various digital subscriber line (DSL) processors for a range of power carrier infrastructure and customer premises equipment devices. Ikanos Communications has a market cap of $39.5 million and is part of the technology sector. Shares are down 66.7% year-to-date as of the close of trading on Monday. Currently there are 2 analysts who rate Ikanos Communications a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Ikanos Communications as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from TheStreet Ratings analysis on IKAN go 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 133.3% when compared to the same quarter one year ago, falling from -$4.42 million to -$10.31 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, IKANOS COMMUNICATIONS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$1.85 million or 270.50% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 65.63%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 66.66% 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.
  • IKANOS COMMUNICATIONS INC 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 reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, IKANOS COMMUNICATIONS INC reported poor results of -$0.40 versus -$0.24 in the prior year. This year, the market expects an improvement in earnings (-$0.36 versus -$0.40).

You can view the full analysis from the report here: Ikanos Communications Ratings Report

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Frequency Electronics ( FEIM) was another company that pushed the Telecommunications industry lower today. Frequency Electronics was down $0.40 (3.5%) to $11.04 on heavy volume. Throughout the day, 9,310 shares of Frequency Electronics exchanged hands as compared to its average daily volume of 6,100 shares. The stock ranged in price between $11.00-$11.32 after having opened the day at $11.32 as compared to the previous trading day's close of $11.44.

Frequency Electronics, Inc., together with its subsidiaries, engages in the design, development, and manufacture of precision time and frequency control products and components for microwave integrated circuit applications. It operates in three segments: FEI-NY, Gillam-FEI, and FEI-Zyfer. Frequency Electronics has a market cap of $98.3 million and is part of the technology sector. Shares are down 1.9% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates Frequency Electronics as a buy. 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, growth in earnings per share, increase in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.

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Highlights from TheStreet Ratings analysis on FEIM go as follows:

  • FEIM's revenue growth has slightly outpaced the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 11.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FEIM'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. Along with this, the company maintains a quick ratio of 4.32, which clearly demonstrates the ability to cover short-term cash needs.
  • FREQUENCY ELECTRONICS INC 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 year. We feel that this trend should continue. During the past fiscal year, FREQUENCY ELECTRONICS INC increased its bottom line by earning $0.47 versus $0.43 in the prior year. This year, the market expects an improvement in earnings ($0.70 versus $0.47).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 1855.8% when compared to the same quarter one year prior, rising from -$0.04 million to $0.76 million.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.

You can view the full analysis from the report here: Frequency Electronics 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.

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