TheStreet Ratings Top 10 Rating Changes

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Rating Change #6

Logitech International S.A. (LOGI) 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, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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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 Computers & Peripherals industry. The net income has significantly decreased by 452.3% when compared to the same quarter one year ago, falling from $55.33 million to -$194.94 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 Computers & Peripherals industry and the overall market, LOGITECH INTERNATIONAL SA's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $95.10 million or 37.65% 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 share price of LOGITECH INTERNATIONAL SA has not done very well: it is down 14.34% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • LOGITECH INTERNATIONAL SA 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. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, LOGITECH INTERNATIONAL SA reported lower earnings of $0.42 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($0.44 versus $0.42).
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Logitech International S.A. designs, manufactures, and markets hardware and software products that enable digital navigation, music and video entertainment, gaming, social networking, audio and video communication over the Internet, video security, and home-entertainment control. The company has a P/E ratio of 15.2, below the S&P 500 P/E ratio of 17.7. Logitech International S.A has a market cap of $1.2 billion and is part of the technology sector and computer hardware industry. Shares are down 3.7% year to date as of the close of trading on Friday.