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 (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and poor profit margins.
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Highlights from the ratings report include:
- 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 Software industry and the overall market, BSQUARE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for BSQUARE CORP is rather low; currently it is at 16.27%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.72% is significantly below that of the industry average.
- BSQUARE CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, BSQUARE CORP swung to a loss, reporting -$0.47 versus $0.07 in the prior year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 54.4% when compared to the same quarter one year prior, rising from -$0.86 million to -$0.39 million.
- This stock has increased by 27.37% over the past year, outperforming the rise in the S&P 500 Index during the same period. Despite the fact that the stock's value has already enjoyed nice gains in the past year, we feel that the risks surrounding an investment in this stock outweigh any potential future returns.
BSQUARE Corporation provides software solutions and related engineering services to companies that develop smart connected systems in North America, Asia, Europe, and internationally. Bsquare has a market cap of $40 million and is part of the technology sector and computer software & services industry. Shares are down 3.9% year to date as of the close of trading on Tuesday.
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