THE STREET RATING ON NVTL 9/21/14
We rate NOVATEL WIRELESS INC (NVTL) 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 unimpressive growth in net income, disappointing return on equity, poor profit
margins and weak operating cash flow.
HIGHLIGHTS
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 120.7% when compared to the same quarter one year ago, falling from
-$7.89 million to -$17.42 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, NOVATEL WIRELESS INC's return on equity significantly trails that
of both the industry average and the S&P 500.
The gross profit margin for NOVATEL WIRELESS INC is rather low; currently it is at 15.46%. It has decreased
from the same quarter the previous year. Along with this, the net profit margin of -46.72% is significantly
below that of the industry average.
Net operating cash flow has significantly decreased to -$4.36 million or 194.36% when compared to the same
quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
NVTL, with its very weak revenue results, has greatly underperformed against the industry average of 4.0%.
Since the same quarter one year prior, revenues plummeted by 59.1%. Weakness in the company's revenue
seems to have hurt the bottom line, decreasing earnings per share.
