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 (
-- GSE Systems
) 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, poor profit margins and generally disappointing historical performance in the stock itself.
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Highlights from the ratings report include:
- GSE SYSTEMS INC 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, GSE SYSTEMS INC reported lower earnings of $0.06 versus $0.15 in the prior year. For the next year, the market is expecting a contraction of 16.7% in earnings ($0.05 versus $0.06).
- 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 318.5% when compared to the same quarter one year ago, falling from $0.53 million to -$1.16 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, GSE SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for GSE SYSTEMS INC is rather low; currently it is at 23.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -9.35% is significantly below that of the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 29.62%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 300.00% 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.
GSE Systems, Inc. provides training simulators and educational solutions to the energy, process, manufacturing, and government sectors in the United States, Europe, and Asia. The company has a P/E ratio of 31.5, above the S&P 500 P/E ratio of 17.7. GSE Systems has a market cap of $34.7 million and is part of the technology sector and computer software & services industry. Shares are down 12.5% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet Ratings Staff
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