NEW YORK (
-- Alere Inc
) 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 generally weak debt management.
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 Health Care Equipment & Supplies industry. The net income has significantly decreased by 299.4% when compared to the same quarter one year ago, falling from -$2.35 million to -$9.40 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 Health Care Equipment & Supplies industry and the overall market, ALERE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio of 1.09 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, ALR's quick ratio is somewhat strong at 1.21, demonstrating the ability to handle short-term liquidity needs.
- ALR has underperformed the S&P 500 Index, declining 20.76% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The gross profit margin for ALERE INC is rather high; currently it is at 51.80%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, ALR's net profit margin of -1.70% significantly underperformed when compared to the industry average.
Alere Inc. engages in the development, manufacture, and marketing of consumer and professional medical diagnostic products in the United States and internationally. Alere has a market cap of $2.1 billion and is part of the
industry. Shares are down 36.6% year to date as of the close of trading on Friday.
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