ShoreTel Inc. Stock Downgraded
(SHOR)
NEW YORK
-- ShoreTel
(Nasdaq:SHOR) has been
downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can
be seen in multiple areas, such as its deteriorating net income and generally
disappointing historical performance in the stock itself.
Highlights
from the ratings report include:
- 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 Communications Equipment
industry. The net income has significantly decreased
by 257.3% when compared to the same quarter one year ago, falling from -$2.38 million to -$8.51 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 62.89%, worse than the
S&P 500's performance. Consistent with the plunge in the stock price,
the company's earnings per share are down
240.00% 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 Communications Equipment industry and
the overall market, SHORETEL INC's return on equity significantly trails
that of both the industry average and the S&P 500.
- The gross profit
margin for SHORETEL INC is rather high; currently it is at 66.20%. Regardless of SHOR's high profit margin, it has
managed to decrease from the same period last year. Despite the
mixed results of the gross profit margin, SHOR's net profit margin of
-15.10% significantly underperformed when compared to the industry
average.
- SHORETEL INC has
exprienced 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,
SHORETEL INC continued to lose money by earning -$0.25 versus -$0.29 in
the prior year. This year, the market expects an improvement in earnings
(-$0.05 versus -$0.25).
.
Shoretel,
Inc., together with its subsidiaries, engages in the development and sale of
Internet protocol (IP) communications systems for enterprises in the United
States and internationally. ShoreTel has a market cap of $233.3 million and is
part of the technology
sector and telecommunications
industry. Shares are down 35.9% year to date as of the close of trading on
Wednesday.
We feel that this is significant because Shoretel recently acquired M5 Networks a hosted provider and because we feel that this is a sign of hard times for telecom systems hardware providers.