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

)

-- Emulex

(NYSE:

ELX

) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income 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:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Communications Equipment industry. The net income has decreased by 5.2% when compared to the same quarter one year ago, dropping from -$6.84 million to -$7.20 million.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, ELX has underperformed the S&P 500 Index, declining 14.10% 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 return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Communications Equipment industry and the overall market, EMULEX CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • ELX, with its decline in revenue, slightly underperformed the industry average of 2.3%. Since the same quarter one year prior, revenues slightly dropped by 6.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • EMULEX CORP's earnings per share declined by 12.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EMULEX CORP continued to lose money by earning -$0.06 versus -$0.13 in the prior year. This year, the market expects an improvement in earnings ($0.52 versus -$0.06).

Emulex Corporation provides network connectivity, monitoring, and management products for networks that support enterprise, cloud, government, and telecommunications worldwide. Emulex has a market cap of $422.5 million and is part of the technology sector and computer hardware industry. Shares are down 26.8% year to date as of the close of trading on Wednesday.

You can view the full

Emulex Ratings Report

or get investment ideas from our

investment research center

.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more

.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.