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"We rate INFOSONICS CORP (IFON) a SELL. This is driven by several 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 and poor profit margins."
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 1961.8% when compared to the same quarter one year ago, falling from $0.03 million to -$0.63 million.
- The gross profit margin for INFOSONICS CORP is rather low; currently it is at 16.29%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -7.77% is significantly below that of the industry average.
- 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, INFOSONICS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- IFON, with its decline in revenue, underperformed when compared the industry average of 5.7%. Since the same quarter one year prior, revenues fell by 17.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- INFOSONICS CORP's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, INFOSONICS CORP continued to lose money by earning -$0.04 versus -$0.17 in the prior year.
- You can view the full analysis from the report here: IFON Ratings Report