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Telestone Technologies Corporation Stock Downgraded (TSTC)

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

  • 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:

  • TELESTONE TECHNOLOGIES CORP 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. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, TELESTONE TECHNOLOGIES CORP reported lower earnings of $1.21 versus $2.29 in the prior year.
  • 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 Communications Equipment industry. The net income has significantly decreased by 349.1% when compared to the same quarter one year ago, falling from $5.24 million to -$13.06 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 Communications Equipment industry and the overall market, TELESTONE TECHNOLOGIES CORP'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 72.12%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 319.04% compared to the year-earlier 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.
  • 39.20% is the gross profit margin for TELESTONE TECHNOLOGIES CORP which we consider to be strong. Regardless of TSTC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TSTC's net profit margin of -75.06% significantly underperformed when compared to the industry average.
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Telestone Technologies Corporation offers wireless local-access network technologies and solutions primarily in the People's Republic of China. Telestone has a market cap of $17 million and is part of the technology sector and telecommunications industry. Shares are down 66.8% year to date as of the close of trading on Wednesday.

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

-- Written by a member of TheStreet Ratings Staff

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