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"We rate ARADIGM CORP (ARDM) a SELL. This is driven by multiple weaknesses, 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 area that we feel has been the company's primary weakness has been its relatively poor performance when compared with the S&P 500 during the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- In its most recent trading session, ARDM 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.
- ARADIGM CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ARADIGM CORP reported poor results of -$2.40 versus -$1.60 in the prior year. This year, the market expects an improvement in earnings ($0.23 versus -$2.40).
- Compared to other companies in the Pharmaceuticals industry and the overall market, ARADIGM CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 546.07% to $8.64 million when compared to the same quarter last year. In addition, ARADIGM CORP has also vastly surpassed the industry average cash flow growth rate of -65.22%.
- ARDM 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 6.93, which clearly demonstrates the ability to cover short-term cash needs.
- You can view the full analysis from the report here: ARDM Ratings Report