NN Inc. ($NNBR) Surges Following First-Quarter Results
NN Inc. ($NNBR) Surges Following First-Quarter Results
Shares of NN Inc. (NASDAQ: NNBR) surged more than 15% in today’s mid-day trading. Johnson City, Tennessee-based NN operates in three different business segments, which include the metal bearings component segment, the plastic and rubber component segment, and the precious metal component segment. The small-cap stock reached a high of $7.50 today, and by mid-day was up 4.92% to $6.83, with volume up from daily average of 47,000 to 61,472.
The company today reported its first-quarter results, posting an increase of 47.3% in its first-quarter revenue, which stood at $85.3 million. The company benefited from an increase in demand for its products in industrial and automotive markets. It reported a net income per diluted share of $0.01. In the same period last year, the company reported a loss per share of $0.59 per share. The company’s improved results are largely a result of a recovery in the global economy.
In its latest 10K filing, NN mentions that it suffered significant losses of income during the global recession. As a result, the company’s financial condition is significantly weakened. In order to remain solvent, the company says that it has to rely on the continued provision of financing from revolving credit lenders and its senior notes lender. Also, the revised covenant levels by lenders provide little flexibility in case the company doesn’t meet its forecasts. This creates a lot of uncertainty around the company’s future and makes the small-cap stock subject to volatility. And, then of course, the company’s business prospects largely depend on how sustainable the global economic recovery is going to be.
The small-cap stock has been very volatile in the past year, with a 52-week range of $1.27-$7.50. The stock has a beta of 2.90, which is very high and implies volatility. The stock has one Buy and One Hold rating. Currently, it is trading above its 50-day and 200-day moving averages. The company’s first-quarter results are a definite positive, however, solvency issues could mean that the small-cap stock may continue to be volatile.
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