NEW YORK (TheStreet) -- Velti (Nasdaq:VELT) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- VELT's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 51.68%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, VELTI PLC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for VELTI PLC is rather high; currently it is at 52.20%. Regardless of VELT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VELT's net profit margin of -17.00% significantly underperformed when compared to the industry average.
- VELTI PLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VELTI PLC reported poor results of -$0.40 versus -$0.07 in the prior year. This year, the market expects an improvement in earnings ($0.74 versus -$0.40).
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Internet Software & Services industry average. The net income increased by 44.4% when compared to the same quarter one year prior, rising from -$15.87 million to -$8.82 million.
-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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