NEW YORK (TheStreet) -- Shares of Acacia Research Corp. (ACTG) are falling by 14.30% to $13.69 in mid-morning trading on Wednesday, after a California court ruled against the company in a patent infringement case that involved Apple (AAPL) AT&T (T) , HTC Corp. (HTCKF) , and Verizon (VZ) , the Dow Jones Business Journal reports.
Acacia Research is California-based patent licensing firm.
The court said on Tuesday that it found no infringement in the cases, Dow Jones said, adding that big tech companies like Apple often deal with patent-infringement lawsuits involving their products.
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Last week the company said its subsidiary American Vehicular Sciences LLC settled a patent license dispute with Tom Tom Inc. and Tom Tom International BV.
The agreement resolved pending litigation in the U.S. District Court for the eastern district of Texas, RTT News reported.
Separately, TheStreet Ratings team rates ACACIA RESEARCH CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ACACIA RESEARCH CORP (ACTG) a SELL. This is driven by a number of negative factors, 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 disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 Professional Services industry and the overall market, ACACIA RESEARCH CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for ACACIA RESEARCH CORP is currently extremely low, coming in at 6.73%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, ACTG's net profit margin of -33.38% significantly underperformed when compared to the industry average.
- ACACIA RESEARCH CORP has improved earnings per share by 21.2% 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, ACACIA RESEARCH CORP swung to a loss, reporting -$1.18 versus $1.28 in the prior year. This year, the market expects an improvement in earnings ($0.30 versus -$1.18).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Professional Services industry average. The net income increased by 21.0% when compared to the same quarter one year prior, going from -$15.71 million to -$12.42 million.
- The stock has risen over the past year and, it has performed in line with the S&P 500 thus far. 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.
- You can view the full analysis from the report here: ACTG Ratings Report