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DTS Inc. Stock Downgraded (DTSI)

Editor's Note: 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.

NEW YORK (TheStreet) -- DTS (Nasdaq:DTSI) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 757.7% when compared to the same quarter one year ago, falling from $2.90 million to -$19.09 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, DTS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 50.70%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 711.76% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • DTS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, DTS INC increased its bottom line by earning $1.05 versus $0.84 in the prior year. For the next year, the market is expecting a contraction of 90.5% in earnings ($0.10 versus $1.05).
  • Net operating cash flow has significantly increased by 65.78% to $6.66 million when compared to the same quarter last year. In addition, DTS INC has also vastly surpassed the industry average cash flow growth rate of -7.62%.
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DTS, Inc. provides audio technologies that are incorporated into various consumer electronics devices worldwide. Its audio technologies enable the delivery and playback of clear and compelling high-definition audio. The company has a P/E ratio of -29, below the S&P 500 P/E ratio of 17.7. DTS has a market cap of $277.2 million and is part of the technology sector and computer software & services industry. Shares are down 45.7% year to date as of the close of trading on Tuesday.

You can view the full DTS Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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