Why Emcore (EMKR) Stock Is Up Today

NEW YORK (TheStreet) -- Emcore (EMKR) was gaining 29.6% to $5.56 Thursday after announcing the sale of its Space Photovoltaics business and its CEO transition plan.

The semiconductor company said it will sell its Space Photovoltaics business to private equity firm Veritas Capital for $150 million in cash and the assumption of certain liabilities. The sale of the business included the rights to all the buildings Emcor owns in Albuquerque, NM and the approximately 275 employees who work in the city.

Connected to the sale of the Space Photovoltaics Emcore announced that president and CEO Dr. Hong Hou will step down from his position. Hou will continue his position until the company is able to find a successor.

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TheStreet Ratings team rates EMCORE CORP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate EMCORE CORP (EMKR) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 4.2%. Since the same quarter one year prior, revenues rose by 33.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 56.7% when compared to the same quarter one year prior, rising from -$7.28 million to -$3.15 million.
  • Although EMKR's debt-to-equity ratio of 0.22 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 0.96 is somewhat weak and could be cause for future problems.
  • Net operating cash flow has decreased to -$3.70 million or 46.53% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 Communications Equipment industry and the overall market, EMCORE CORP'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: EMKR Ratings Report

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