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NEW YORK (TheStreet) -- Allot Communications (ALLT) has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALLOT COMMUNICATIONS LTD (ALLT) a SELL. This is driven by some concerns, 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 generally disappointing historical performance in the stock itself."
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 Software industry. The net income has significantly decreased by 290.2% when compared to the same quarter one year ago, falling from $1.19 million to -$2.25 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 44.23%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 275.00% 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.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, ALLOT COMMUNICATIONS LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for ALLOT COMMUNICATIONS LTD is currently very high, coming in at 70.70%. Regardless of ALLT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ALLT's net profit margin of -7.35% significantly underperformed when compared to the industry average.
- ALLOT COMMUNICATIONS LTD 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ALLOT COMMUNICATIONS LTD continued to lose money by earning -$0.08 versus -$0.20 in the prior year. This year, the market expects an improvement in earnings ($0.50 versus -$0.08).
- You can view the full analysis from the report here: ALLT Ratings Report