3 Stocks Pushing The Computer Hardware Industry Lower

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.

The Computer Hardware industry as a whole closed the day down 1.0% versus the S&P 500, which was down 0.1%. Laggards within the Computer Hardware industry included Video Display ( VIDE), down 5.5%, Mad Catz Interactive ( MCZ), down 1.8%, Dataram ( DRAM), down 2.5%, Key Tronic ( KTCC), down 2.1% and Elecsys ( ESYS), down 5.2%.

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

Super Micro Computer ( SMCI) is one of the companies that pushed the Computer Hardware industry lower today. Super Micro Computer was down $1.31 (4.8%) to $25.69 on average volume. Throughout the day, 588,505 shares of Super Micro Computer exchanged hands as compared to its average daily volume of 421,500 shares. The stock ranged in price between $25.46-$27.64 after having opened the day at $27.23 as compared to the previous trading day's close of $27.00.

Super Micro Computer, Inc., together with its subsidiaries, develops and provides high performance server solutions based on modular and open-standard architecture in the United States and internationally. Super Micro Computer has a market cap of $1.1 billion and is part of the technology sector. Shares are up 57.3% year-to-date as of the close of trading on Tuesday. Currently there are 3 analysts who rate Super Micro Computer a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Super Micro Computer as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from TheStreet Ratings analysis on SMCI go as follows:

  • The revenue growth came in higher than the industry average of 9.3%. Since the same quarter one year prior, revenues rose by 32.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SUPER MICRO COMPUTER 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 two years. We feel that this trend should continue. During the past fiscal year, SUPER MICRO COMPUTER INC increased its bottom line by earning $1.16 versus $0.48 in the prior year. This year, the market expects an improvement in earnings ($1.73 versus $1.16).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Computers & Peripherals industry. The net income increased by 96.4% when compared to the same quarter one year prior, rising from $8.43 million to $16.55 million.
  • Powered by its strong earnings growth of 78.94% and other important driving factors, this stock has surged by 94.87% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • Although SMCI's debt-to-equity ratio of 0.10 is very low, it is currently higher than that of the industry average. Although the company had a strong debt-to-equity ratio, its quick ratio of 1.00 is somewhat weak and could be cause for future problems.

You can view the full analysis from the report here: Super Micro Computer Ratings Report

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At the close, Key Tronic ( KTCC) was down $0.23 (2.1%) to $10.54 on average volume. Throughout the day, 16,230 shares of Key Tronic exchanged hands as compared to its average daily volume of 12,600 shares. The stock ranged in price between $10.51-$10.95 after having opened the day at $10.75 as compared to the previous trading day's close of $10.77.

Key Tronic Corporation, doing business as KeyTronicEMS Co., provides electronic manufacturing services (EMS) and solutions to original equipment manufacturers in the United States, Mexico, and China. Key Tronic has a market cap of $115.6 million and is part of the technology sector. Shares are down 2.3% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Key Tronic as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from TheStreet Ratings analysis on KTCC go as follows:

  • KTCC 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.05, which illustrates the ability to avoid short-term cash problems.
  • 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • KTCC, with its decline in revenue, underperformed when compared the industry average of 3.5%. Since the same quarter one year prior, revenues fell by 14.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The gross profit margin for KEY TRONIC CORP is currently extremely low, coming in at 9.25%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.91% trails that of the industry average.

You can view the full analysis from the report here: Key Tronic 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.

Mad Catz Interactive ( MCZ) was another company that pushed the Computer Hardware industry lower today. Mad Catz Interactive was down $0.01 (1.8%) to $0.58 on light volume. Throughout the day, 71,722 shares of Mad Catz Interactive exchanged hands as compared to its average daily volume of 157,300 shares. The stock ranged in price between $0.58-$0.59 after having opened the day at $0.58 as compared to the previous trading day's close of $0.59.

Mad Catz Interactive, Inc. designs, manufactures, markets, sells, and distributes various entertainment products in the United States and internationally. Mad Catz Interactive has a market cap of $37.8 million and is part of the technology sector. Shares are up 13.8% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Mad Catz Interactive as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on MCZ go as follows:

  • The gross profit margin for MAD CATZ INTERACTIVE INC is currently lower than what is desirable, coming in at 32.57%. Regardless of MCZ's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MCZ's net profit margin of -7.43% significantly underperformed when compared to the industry average.
  • MCZ has underperformed the S&P 500 Index, declining 11.36% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Household Durables industry and the overall market, MAD CATZ INTERACTIVE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • MCZ, with its decline in revenue, slightly underperformed the industry average of 5.5%. Since the same quarter one year prior, revenues fell by 10.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.87, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.45 is very weak and demonstrates a lack of ability to pay short-term obligations.

You can view the full analysis from the report here: Mad Catz Interactive 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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