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 1.7% versus the S&P 500, which was down 0.1%. Laggards within the Computer Hardware industry included Video Display ( VIDE), down 4.2%, Lantronix ( LTRX), down 5.6%, Mad Catz Interactive ( MCZ), down 2.1%, China TechFaith Wireless Comm Tech ( CNTF), down 2.8% and Interphase ( INPH), down 3.1%.

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

China TechFaith Wireless Comm Tech ( CNTF) is one of the companies that pushed the Computer Hardware industry lower today. China TechFaith Wireless Comm Tech was down $0.04 (2.8%) to $1.37 on light volume. Throughout the day, 50,440 shares of China TechFaith Wireless Comm Tech exchanged hands as compared to its average daily volume of 71,600 shares. The stock ranged in price between $1.36-$1.41 after having opened the day at $1.37 as compared to the previous trading day's close of $1.41.

China Techfaith Wireless Communication Technology Limited is engaged in the original design, development, and sale of mobile handsets in the People's Republic of China and internationally. China TechFaith Wireless Comm Tech has a market cap of $75.2 million and is part of the technology sector. Shares are down 15.6% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings rates China TechFaith Wireless Comm Tech as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from TheStreet Ratings analysis on CNTF 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 Computers & Peripherals industry. The net income has significantly decreased by 114.9% when compared to the same quarter one year ago, falling from -$0.97 million to -$2.09 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Computers & Peripherals industry and the overall market, CHINA TECHFAITH WIRELESS-ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CHINA TECHFAITH WIRELESS-ADR is currently extremely low, coming in at 11.43%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.76% is significantly below that of the industry average.
  • In its most recent trading session, CNTF has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • CHINA TECHFAITH WIRELESS-ADR 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. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, CHINA TECHFAITH WIRELESS-ADR continued to lose money by earning -$0.05 versus -$0.06 in the prior year.

You can view the full analysis from the report here: China TechFaith Wireless Comm Tech 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.

At the close, Mad Catz Interactive ( MCZ) was down $0.01 (2.1%) to $0.54 on average volume. Throughout the day, 179,491 shares of Mad Catz Interactive exchanged hands as compared to its average daily volume of 134,500 shares. The stock ranged in price between $0.50-$0.55 after having opened the day at $0.52 as compared to the previous trading day's close of $0.55.

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 $35.2 million and is part of the technology sector. Shares are up 6.8% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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.

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 14.10% 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 5.8%. 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.

Lantronix ( LTRX) was another company that pushed the Computer Hardware industry lower today. Lantronix was down $0.12 (5.6%) to $2.03 on heavy volume. Throughout the day, 117,788 shares of Lantronix exchanged hands as compared to its average daily volume of 24,500 shares. The stock ranged in price between $2.02-$2.15 after having opened the day at $2.15 as compared to the previous trading day's close of $2.15.

Lantronix, Inc. designs, develops, markets, and sells networking and communications products in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. Lantronix has a market cap of $26.8 million and is part of the technology sector. Shares are up 37.4% year-to-date as of the close of trading on Friday. Currently there is 1 analyst who rates Lantronix a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Lantronix as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Highlights from TheStreet Ratings analysis on LTRX go as follows:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • LANTRONIX 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. This trend suggests that the performance of the business is improving. During the past fiscal year, LANTRONIX INC continued to lose money by earning -$0.06 versus -$0.19 in the prior year. This year, the market expects an improvement in earnings (-$0.01 versus -$0.06).
  • LTRX's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.99 is somewhat weak and could be cause for future problems.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.3%. Since the same quarter one year prior, revenues slightly dropped by 0.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Communications Equipment industry and the overall market, LANTRONIX INC's return on equity significantly trails that of both the industry average and the S&P 500.

You can view the full analysis from the report here: Lantronix 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.

More from Markets

Dow Tumbles as Trump Calls Off North Korea Summit

Dow Tumbles as Trump Calls Off North Korea Summit

Jim Cramer: Does Saudi Arabia Think Oil Prices Are Too High?

Jim Cramer: Does Saudi Arabia Think Oil Prices Are Too High?

Stocks Could Easily Crater Into Memorial Day Weekend

Stocks Could Easily Crater Into Memorial Day Weekend

Video: Here Is How Real Estate Investment Trusts Can Boost Your Portfolio

Video: Here Is How Real Estate Investment Trusts Can Boost Your Portfolio

Celgene Shares Rise on Plans to Increase Stock Buybacks

Celgene Shares Rise on Plans to Increase Stock Buybacks