Sophisticated Investors Should Avoid: RigNet Inc. (RNET), Compugen Ltd. (CGEN)

RigNet Inc. (NASDAQ: RNET) shares are -21.67% down in the year-to-date (YTD) period and have moved 19.95% or $0.86 higher in the latest trading session. However, stock’s trailing 12-month performance remains nearly +571.43% lower. Comparatively, the stock is -24.75% down YTD and 392.38% over the trailing 3-month period. If we look at the shorter duration, its week performance is 24.88% and 100.39% over the month.

Analyst Recommendations

On October 16, 2019, National Securities recommended the RNET stock is a Buy, while earlier, National Securities had Downgrade the stock as a Neutral on April 17, 2020. 1 analysts offering the recommendations for the stock have a consensus rating of 1.00 to suggest that the RNET stock is a “Strong Buy. 0 of the 1 analysts rate the stock as a “Sell”, while 0 has rated it as “Underweight”. 1 recommend buying, with 0 rating it as an Overweight.

The stock currently trades at $5.17. The forecasts give the RigNet Inc. stock a price target range of $12.00 on the higher side while at least one analyst think the stock could plunge to a low of $12.00. The two limits represent an upside potential of 56.92% or 56.92%.

Earnings Forecast

Analysts estimate the earnings to increase 111.30% in the current quarter to -$0.35, down from the $0.05 reported in the same quarter a year ago. For the current year, earnings should grow to an average of -$0.4, down -14.00% from -$0.58 reported last year. Analysts also offered guidance for the next financial quarter, with their average projected EPS at between -$0.34 and -$0.34. Wall Street estimates earnings per share to be at an average of -$1.52 for the next year.

Insider Transactions Summary

According to SEC data, total insider shares purchases at the company stands at 36 over the last 12 months, while SEC filings reveal that there have been 30 insider sales over the same period. Insiders have purchases 411,733 shares while those sold by company executives and officers stand at 119,405. The last 3 months have seen insiders trade a total of 3,930 and 1,547 in purchases and sales respectively.

Compugen Ltd. (NASDAQ:CGEN), on the other hand, is trading around $16.87 with a market cap of $1.37B and analyst research firms have a positive stance on its shares. Analysts predict that the stock will reach $19.75 and spell out a more modest performance – a 14.58% return. Some analysts are even forecasting -$0.37 per share in earnings this year on a short term (1 year) basis.

Let us briefly look at the Compugen Ltd. (CGEN) financials, with a focus on its operating details as indicated in its earnings report for the last quarter.

Company balance sheet and cash flow

CGEN’s operating expenses over the recent quarter were at -$6.25 million. This represented a 192.1% of the company’s total revenues which amounted $6.78 million. With this in place, we can see that the company’s diluted EPS declined -$0.08 on the year-over-year period, shrinking to -$0.10 as given in the last earnings report.

In terms of the balance sheet & cash flow as of (Sep 2020), the total assets figure advanced to $145.92 million from $131.15 million over the previous quarter. Short term investments amounted to $122.96 million while total current assets were at $137.15 million. The cash flow from operating activities totaled -$11.57 million, significantly higher than the -$16.41 million reported in the year-ago quarter. The company’s free cash flow for the quarter was -$11.67 million.

Major holders

Insiders own 12.00% of the company shares, while shares held by institutions stand at 48.40%. Investors are also buoyed by the number of investors in a company, with Compugen Ltd. having a total of 72 institutions that hold shares in the company. The top two institutional holders are ARK Investment Management, LLC with over 14.1 million shares worth more than $211.76 million. As of Jun 29, 2020, ARK Investment Management, LLC held 17.05% of shares outstanding.

The other major institutional holder is Nikko Asset Management Americas, Inc., with the investment firm holding over 7.14 million shares as of Jun 29, 2020. The firm’s total holdings are worth over $107.3 million and represent 8.64% of shares outstanding.