3 Stocks Advancing The Computer Hardware Industry

All three major indices are trading down today with the Dow Jones Industrial Average ( ^DJI) trading down 324.80 points (-1.9%) at 16,666 as of Friday, Aug. 21, 2015, 12:55 PM ET. The NYSE advances/declines ratio sits at 525 issues advancing vs. 2,498 declining with 133 unchanged.

The Computer Hardware industry as a whole closed the day down 0.9% versus the S&P 500, which was down 1.7%. Top gainers within the Computer Hardware industry included Interphase ( INPH), up 2.6%, Crossroads Systems ( CRDS), up 3.6%, Mad Catz Interactive ( MCZ), up 3.4%, Datalink ( DTLK), up 2.8% and MRV Communications ( MRVC), up 5.5%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the industry higher today:

Mad Catz Interactive ( MCZ) is one of the companies that pushed the Computer Hardware industry higher today. Mad Catz Interactive was up $0.01 (3.4%) to $0.45 on average volume. Throughout the day, 380,611 shares of Mad Catz Interactive exchanged hands as compared to its average daily volume of 270,400 shares. The stock ranged in a price between $0.42-$0.47 after having opened the day at $0.43 as compared to the previous trading day's close of $0.44.

Mad Catz Interactive, Inc. designs, manufactures, markets, sells, and distributes various entertainment products in the United States and internationally. Mad Catz Interactive has a market cap of $30.9 million and is part of the technology sector. Shares are up 2.5% year-to-date as of the close of trading on Thursday. Currently there are 2 analysts who rate Mad Catz Interactive a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Mad Catz Interactive as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and weak operating cash flow.

Highlights from TheStreet Ratings analysis on MCZ go as follows:

  • The gross profit margin for MAD CATZ INTERACTIVE INC is currently lower than what is desirable, coming in at 25.75%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 33.55% has significantly outperformed against the industry average.
  • Net operating cash flow has decreased to $5.70 million or 23.83% when compared to the same quarter last year. Despite a decrease in cash flow of 23.83%, MAD CATZ INTERACTIVE INC is still significantly exceeding the industry average of -103.90%.
  • This stock's share value has moved by only 35.00% over the past year. 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 revenue fell significantly faster than the industry average of 12.9%. Since the same quarter one year prior, revenues fell by 18.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The current debt-to-equity ratio, 0.57, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.49 is very weak and demonstrates a lack of ability to pay short-term obligations.

You can view the full analysis from the report here: Mad Catz Interactive Ratings Report

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At the close, Crossroads Systems ( CRDS) was up $0.04 (3.6%) to $1.05 on light volume. Throughout the day, 21,563 shares of Crossroads Systems exchanged hands as compared to its average daily volume of 76,800 shares. The stock ranged in a price between $1.00-$1.06 after having opened the day at $1.02 as compared to the previous trading day's close of $1.01.

Crossroads Systems, Inc. provides data protection solutions and services worldwide. Crossroads Systems has a market cap of $20.6 million and is part of the technology sector. Shares are down 59.5% year-to-date as of the close of trading on Thursday. Currently there are 2 analysts who rate Crossroads Systems a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Crossroads Systems as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on CRDS go 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 Computers & Peripherals industry. The net income has significantly decreased by 102.0% when compared to the same quarter one year ago, falling from -$1.74 million to -$3.52 million.
  • The debt-to-equity ratio is very high at 4.41 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, CRDS maintains a poor quick ratio of 0.98, which illustrates the inability to avoid short-term cash problems.
  • 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 Computers & Peripherals industry and the overall market, CROSSROADS SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$2.28 million or 81.47% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 58.08%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 35.71% 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.

You can view the full analysis from the report here: Crossroads Systems Ratings Report

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Interphase ( INPH) was another company that pushed the Computer Hardware industry higher today. Interphase was up $0.01 (2.6%) to $0.31 on light volume. Throughout the day, 9,765 shares of Interphase exchanged hands as compared to its average daily volume of 126,000 shares. The stock ranged in a price between $0.30-$0.34 after having opened the day at $0.34 as compared to the previous trading day's close of $0.30.

Interphase Corporation, an information and communications technology company, provides embedded computing solutions, engineering design services, and contract manufacturing services in North America, the Pacific Rim, and Europe. Interphase has a market cap of $2.9 million and is part of the technology sector. Shares are down 86.7% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate Interphase a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Interphase as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and poor profit margins.

Highlights from TheStreet Ratings analysis on INPH go as follows:

  • INTERPHASE CORP's earnings per share declined by 28.6% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, INTERPHASE CORP reported poor results of -$0.68 versus -$0.39 in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Communications Equipment industry. The net income has significantly decreased by 48.5% when compared to the same quarter one year ago, falling from -$1.02 million to -$1.51 million.
  • 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 Communications Equipment industry and the overall market, INTERPHASE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$1.30 million or 68.66% 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 gross profit margin for INTERPHASE CORP is currently lower than what is desirable, coming in at 34.58%. Regardless of INPH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, INPH's net profit margin of -72.58% significantly underperformed when compared to the industry average.

You can view the full analysis from the report here: Interphase Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

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