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"We rate GIGOPTIX INC (GIG) 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 unimpressive growth in net income and weak operating cash flow."
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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 47.3% when compared to the same quarter one year ago, falling from -$1.39 million to -$2.04 million.
- Net operating cash flow has significantly decreased to -$0.53 million or 310.71% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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 Semiconductors & Semiconductor Equipment industry and the overall market, GIGOPTIX INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for GIGOPTIX INC is rather high; currently it is at 64.71%. Regardless of GIG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GIG's net profit margin of -25.43% significantly underperformed when compared to the industry average.
- 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, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- You can view the full analysis from the report here: GIG Ratings Report
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