Giga-tronics (GIGA) Stock Falls After Wednesday's Surge

NEW YORK (TheStreet) -- Shares of technical instruments firm Giga-tronics  (GIGA) sold off by 19.79% to $2.27 in morning trading Thursday.

The stock soared by more than 50% on Wednesday after Giga-tronics announced a $3 million order that extended the ongoing production of its high performance YIG filters for an unidentified major aerospace company.

The company said it plans to begin shipments for the new order in September 2015. These orders will be fulfilled by the company's Microsource subsidiary in San Ramon, CA.

"We are pleased to have our customer's continued confidence in Giga-tronics to deliver this sole sourced product on time, while meeting their high standards for quality and reliability," President and CEO John Regazzi said in a statement.

More than 1.6 million shares had changed hands as of 10:31 a.m., compared to the daily average volume of 140,165.

Separately, TheStreet Ratings team rates GIGA-TRONICS INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate GIGA-TRONICS INC (GIGA) 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 generally high debt management risk and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The debt-to-equity ratio is very high at 2.36 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, GIGA has a quick ratio of 0.64, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly decreased to -$1.06 million or 489.33% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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, GIGA-TRONICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 43.38% is the gross profit margin for GIGA-TRONICS INC 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 1.48% trails the industry average.
  • This stock has increased by 47.45% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in GIGA do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • You can view the full analysis from the report here: GIGA Ratings Report

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