NEW YORK (TheStreet) -- Shares of RadiSys (RSYS) were gaining 7.3% to $2.13 on heavy trading volume Wednesday after the provider of wireless infrastructure solutions to the telecom market announced its preliminary first quarter results.
RadiSys said it expects to report earnings of 3 cents a share, above its midpoint guidance of 1 cent a share. The company expects revenue of $48.7 million for the first quarter, up from $43.8 million in the year-ago quarter.
Analysts expect RadiSys to report earnings of 1 cents and revenue of $47.03 million for the first quarter.
The company said that software-systems revenue grew over 20% from the year-ago quarter. RadiSys also said that its embedded products and hardware services segment had an operating income of about $4 million in the first quarter.
RadiSys will release its full first quarter results on April 28.
About 1.7 million shares of RadiSys were traded by 10:53 a.m. Wednesday, above the company's average trading volume of about 181,000 shares a day.
TheStreet Ratings team rates RADISYS CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate RADISYS CORP (RSYS) 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. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- RSYS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 40.00%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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 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 Electronic Equipment, Instruments & Components industry and the overall market, RADISYS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- RSYS, with its decline in revenue, slightly underperformed the industry average of 3.9%. Since the same quarter one year prior, revenues slightly dropped by 3.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- 36.48% is the gross profit margin for RADISYS CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -9.27% is in-line with the industry average.
- Net operating cash flow has significantly increased by 102.91% to $0.18 million when compared to the same quarter last year. In addition, RADISYS CORP has also vastly surpassed the industry average cash flow growth rate of -0.93%.
- You can view the full analysis from the report here: RSYS Ratings Report