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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link

.

NEW YORK (

TheStreet

)

-- Actuate

(Nasdaq:

BIRT

) 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 weak operating cash flow.

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Highlights from the ratings report include:

  • ACTUATE CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ACTUATE CORP reported lower earnings of $0.13 versus $0.19 in the prior year. For the next year, the market is expecting a contraction of 53.8% in earnings ($0.06 versus $0.13).
  • 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 Software industry. The net income has significantly decreased by 211.6% when compared to the same quarter one year ago, falling from $3.02 million to -$3.37 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Software industry and the overall market, ACTUATE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $1.84 million or 80.91% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The revenue fell significantly faster than the industry average of 6.0%. Since the same quarter one year prior, revenues fell by 31.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

Actuate Corporation provides software solutions and services to corporate and government customers worldwide. Actuate has a market cap of $181.9 million and is part of the technology sector and computer software & services industry. Shares are down 49.7% year to date as of the close of trading on Wednesday.

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Actuate Ratings Report

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