2-Star Stocks Poised to Plunge: Mentor Graphics?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, electronic design automation specialist Mentor Graphics (Nasdaq: MENT  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Mentor and see what CAPS investors are saying about the stock right now.

Mentor facts

Headquarters (founded)

Wilsonville, Ore. (1981)

Market Cap

$1.7 billion

Industry

Application software

Trailing-12-Month Revenue

$1.1 billion

Management

Chairman/CEO Walden Rhines
COO/CFO Gregory Hinckley

Return on Equity (average, past 3 years)

6.6%

Cash/Debt

$146.4 million/$226.4 million

Competitors

Altium
Cadence Design Systems
(Nasdaq: CDNS  )
Synopsis
(Nasdaq: SNPS  )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 24% of the 139 members who have rated Mentor believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those bears, fellow Fool Matthew Argersinger (TMFMattyA), succinctly summed up the underperform case for our community:

Though the company is making strides in the aerospace and automotive industries, it's still heavily tied to the ups and downs of the semiconductor market. At best I think this company is a market performer, but the reason for my thumbs down here is management. Both the CEO and CFO have presided over a company that has gone nowhere in terms of market value for nearly 20 years. They own around 1% of the outstanding stock, but have instituted a poison pill provision that pays them nearly $25 million in the event of a change in control, or if an outside party acquires 40% of the stock or is successful in electing independent, non-incumbent members to the board. Shameful. Strong underperform.

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Brian D. Pacampara has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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