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"We rate DIGIMARC CORP (DMRC) 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 solid stock price performance, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, DMRC's share price has jumped by 55.36%, exceeding the performance of the broader market during that same time frame. Although DMRC had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- DMRC 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 6.89, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for DIGIMARC CORP is currently very high, coming in at 77.48%. Regardless of DMRC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DMRC's net profit margin of -28.65% significantly underperformed when compared to the industry average.
- DIGIMARC CORP 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, DIGIMARC CORP swung to a loss, reporting -$0.10 versus $1.15 in the prior year. For the next year, the market is expecting a contraction of 1180.0% in earnings (-$1.28 versus -$0.10).
- 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 Software industry. The net income has significantly decreased by 149.7% when compared to the same quarter one year ago, falling from -$0.80 million to -$1.99 million.
- You can view the full analysis from the report here: DMRC Ratings Report