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"We rate WESTELL TECH INC (WSTL) a SELL. This is driven by a few notable 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 company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
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 Communications Equipment industry. The net income has significantly decreased by 1203.1% when compared to the same quarter one year ago, falling from $1.33 million to -$14.65 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 58.91%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1300.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- WESTELL TECH INC 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, WESTELL TECH INC turned its bottom line around by earning $0.08 versus -$0.74 in the prior year. For the next year, the market is expecting a contraction of 312.5% in earnings (-$0.17 versus $0.08).
- 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 Communications Equipment industry and the overall market, WESTELL TECH INC's return on equity significantly trails that of both the industry average and the S&P 500.
- 36.29% is the gross profit margin for WESTELL TECH INC which we consider to be strong. Regardless of WSTL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WSTL's net profit margin of -61.65% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: WSTL Ratings Report