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Analyst downgrade and slow-growing core business are areas of worry.

II-VI Inc. (NASDAQ: IIVI, Stock Forum) got a kick upstairs this week. It was added to the S&P SmallCap 600. That ought to give it some extra visibility and some more daily volume. 

The firm makes materials for precision use in industrial, medical, military, security, and aerospace applications. That includes infrared, optics, and thermo-electric coolers. In some ways, IIVI may be in too many businesses, or at least it has a lot on its plate. 

IIVI got itself downgraded by Needham recently. The last quarter was OK, but Wall

Street clearly expected more. Revenue went to $80.1 million, up from $64.8 million in the year-ago period. Income from operations went from $10 million to $13.4 million. 

What the company really tried to sell hard when it put out earnings was its backlog of orders, which went up  44% to a record $93.7 billion. It does not seem to be a hefty amount given what the company brings in as revenue, but IVII thought it was good enough to promote. 

 IIVI has a real set of weaknesses for anyone willing to dig into the numbers. The firm's largest division, Infrared Optics, is growing more slowly than the company as a whole. The smallest operation, Military & Materials, is growing fastest. 

Slow growth in a company's core business is not usually a great thing. At over $39,

IIVI trades near the top of its range. That makes it expensive.

ABOUT THE AUTHOR
From the news desk of 24/7 Wall St.

This report was prepared by 24/7 Wall St., LLC exclusively for Stockhouse. 

 
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Comments
Great article, it definitely must be a concern that the largest and smallest divisions have inverted growth rates.
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